Gifts to charity made by companies
Gifts of money to UK charities by companies are made before tax is deducted (i.e. out of gross income or profits) so no Gift Aid declaration is required.
Companies can claim tax relief for donations to UK charities as a charge against income in their corporation tax computation.
Gifts to charity by sole traders or members of partnerships
If you’re a member of a partnership or a sole trader (an individual running an unincorporated business) then you are personally liable to income tax on the profits of your business. The tax reliefs for gifts to charity are therefore available to you as an individual and can be claimed on your Self-Assessment return.
Gifts from businesses run as a partnership are treated as donations of an equal amount from each individual partner - unless the partners specify something different.
You can also choose to donate any tax repayment computed on your Self Assessment using SA donate.
If a sole trader or a business run as a partnership gives equipment (that has been used in their business), trading stock or seconds employees to a charity they can get tax relief for the gift through an adjustment in their trading accounts.
Capital Gains tax relief
If you give assets (other than money) to UK charities and you make an outright gift of the asset, the disposal is treated as being at such a price that there is neither a chargeable gain nor an allowable loss.
If the charity pays you for the asset but the amount paid is less than you originally bought the asset for then that disposal is also treated as being at such a price that there is neither a chargeable gain nor an allowable loss.
Gifts of equipment, trading stock or secondment of employees
Equipment
If your business (sole trader, partnership or company) makes a gift to a UK charity of plant, machinery or equipment, used in the course of your normal trading activities, you can treat their disposal as being at nil value (rather than market value) in your capital allowances computation. As a result, your business will get full capital allowances in respect of the gifted equipment – equal to its cost.
Trading stock
If you’re a business (sole trader, partnership or company) and you make a gift to a UK charity of goods, manufactured or sold as part of your normal trading activities, you can claim the cost of those goods in the business accounts. Nothing is included as a trading receipt so you will get full relief for the cost of those goods against your taxable profit.
Secondment of employees
You can treat the secondment of employees to a UK charity as a legitimate business expense. If your business continues to pay that person you can deduct the cost (wages and expenses) of employing them as if they continued to work for you.
You should continue to operate PAYE on their salary.
VAT
The donation of goods by a business to a UK charity for sale, export or hire is a zero rated supply for VAT purposes.
Further information on Corporate giving on HM Revenue & Customs website -
http://www.hmrc.gov.uk/businesses/giving
other sources of information
gifts to charity
tax effective giving
gifts in kind
