Corporate Donations to Charities - Corporation Tax Relief

Gifts to charity made by companies

Companies can get tax relief on gifts of money to charities. The relief works differently than for individuals, self-employed sole traders and partnerships. This guide explains how companies can claim tax relief when donating money to charity.

• Claiming Corporation Tax relief on gifts to charity
• How to claim Corporation Tax relief
• Time limits for claiming Corporation Tax relief
• Contacting the HMRC Charities Helpline
• More useful links

Claiming Corporation Tax relief on gifts to charity

Gifts of money made to a charity by your company should be paid gross (without deducting Income Tax). The donations are deductible from the total profits of your business when calculating Corporation Tax.

The charity can’t make a Gift Aid tax repayment claim because no tax has been deducted.

Donations that qualify for Corporation Tax relief

Your company can claim tax relief as long as the donation is a payment of money and meets all the qualifying conditions.

For donations to qualify any benefits provided to your company or a 'connected' person in connection with the donation must be below the following limits:

These limits apply separately to each donation.

A company is a person in law and a person is 'connected' if they are:

• a company controlled by the same persons as the donor or persons connected to the persons who control the donor
• the persons who control the donor company and any persons connected with them
•  

An individual is connected with an individual if they are:

• the individual’s husband, wife, civil partner or linear relative, for example son, daughter, parent, grandparent, or grandchild
• any linear relative of the individual's wife, husband or civil partner
•  

Donations that do not qualify for Corporation Tax relief

The following will not count as qualifying donations:

• gifts that come with a condition about repayment
• gifts where your company or a person 'connected' to your company has received a benefit over the values specified above in return
• gifts that come with a condition or arrangement that the charity will purchase property (other than as a gift) from your company or a connected person
• a distribution of profits such as a dividend

Companies can also claim Corporation Tax relief on other gifts to charity. Follow the links available to find out more.

Gifts to charity of land, buildings or shares by companies

Gifts to charity of company equipment, trading stock, or staff help

How to claim Corporation Tax relief

When your company makes a qualifying donation to a charity, the amount paid is a charitable donation. This means that your company can make a claim in its Company Tax Return to deduct the amount of the donation from its taxable profits.

Your company should keep normal accounting records to support entries on your Company Tax Return along with any other relevant documentation, for example correspondence with the charity in relation to the donation such as a 'thank you' letter.

You must keep your tax records for at least six years after the end of the accounting period to which they relate. If HM Revenue & Customs (HMRC) make any enquiries about your Company Tax Return you will need to keep the records until the enquiries are completed.

Charitable donations cannot be used to create or increase your company's trading losses, and they cannot be carried over from year to year. So if you make a donation of more than your taxable profit, the excess is not tax effective. However if your company is part of a group of companies the excess can be used as group relief.

You can also make donations if your company is not resident in the UK but is part of HMRC's Corporation Tax regime. This will generally apply to companies trading in the UK through a branch or agency.

Find out more about completing your Company Tax Return

Find out more about Corporation Tax

Time limits for claiming Corporation Tax relief

You should claim the relief in the accounting period in which your company makes the donation.

However there are special rules for companies that are wholly owned by one or more charities. As long as a donation is made to the parent charity within nine months of the end of a particular accounting period, the company can choose to treat it as if it was paid in that earlier accounting period. A claim to carry back a gift in this way must be made within two years of the end of the accounting period to which the gift relates.