Are charitable donations tax-deductible for limited companies?

When you’re doing well in business it’s a nice gesture to be able to give to others less fortunate than yourself. Giving to others can feel really rewarding knowing that even a small donation can make a big difference to a charity.


Giving to charity also comes with it’s perks for your limited company. As a limited company you can deduct the value of your donations from your business profits to claim tax relief, therefore paying less corporation tax.


Donations to charity are not necessarily just monetary. You can also take into account;


Equipment or trading stock


If you give your used equipment to a charity or CASC you will pay less corporation tax. Equipment can be things like furniture, computers, vehicles and tools or machinery. The equipment must have been used by your company in order for it to qualify for you to claim full capital allowances. You can also choose to gift stock which you usually sell and this will also be deducted from your tax.


Land, property or shares


If you’re feeling really generous you can gift land, property or shares to your chosen charity but it can’t be shared within your own business. You can even sell your land, property or shares at a lower amount than they are worth in order to help out the charity. To calculate your tax relief you must get a market valuation. You can get more information here.


Employees on secondment


Did you know that you can choose to help a charity by sending one (or more) of your employees on secondment? You can also claim back tax if an employee chooses to volunteer for a charity in their work time. You can just deduct the costs as normal business expenses bur you must still pay your employee as usual.


Sponsorship


If you choose to sponsor a charity then as a business you are getting something in return as you are also promoting your own business. However, sponsorship payments are still tax deductible as an allowable business expense.


If your business is able to make donations, no matter how small to a charity or CASC, then this will not only benefit your business when it comes to tax relief, but it will also demonstrate that you are a reputable and trustworthy company who gives back to their community whilst supporting a worthy cause.


If you’re considering making a large charitable donation it’s always best to seek professional advice first. Please get in touch to discuss your thoughts.






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