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Charity Donations from your Limited Company

June 17, 2013, 2:47 p.m.

 

Can I make a Donation to Charity from my Limited Company or is it better for me to pay it personally?

 

Over the last couple of years more and more of our clients and members of the Carrington team are doing their bit for charity. They have raised thousand of pounds for various great causes and this has prompted many to ask us about how donations can be made from their businesses.

A typical question we get asked is 'How is charitable giving treated for tax purposes if it is taken from the Ltd company? Is it better to pay my chosen charity out of my taxed income rather than making a payment direct from my limited company?

John Mumford, our technical director answers:

'Charitable donations can be made directly from your limited company bank account and these would be tax deductible in terms of Corporation Tax.  One thing to remember is that for a company donation to equal that of a personal donation you will need to add 25% to what you would have normally paid personally.

 

Company donation                         £100

Tax relief                                       £20

Net Cost                                        £80

 

Or,

 

Personal donation                           £80

Charity reclaims from HMRC              £20

Total donation                                 £100

 

Different systems, same effect.

You must also remember to ensure you have a record of the UK Registered Charity Number for the charity you are donating to, otherwise HMRC could disallow the tax relief.'

 

                                                         

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