Ask the Accountant

Can I make charity donations through my business?

30/05/2023

Accountancy Expertise – here to answer your questions to help you run a successful business.

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Question

‘I would like to make some donations to charitable organisations from the business, how can this be reflected in the books and is there anything I should be aware of? (e.g. can I make a donation to an international charity (say USA or Spain) from the business?’

Answer

Charitable donations can be paid by a UK company but the following must be considered;

• Payments must be direct from the company bank to the charity – not via an expenses claim from the director.
  A receipt should be kept to confirm who the donation is to.
• The charity must be made aware it is a company donation as personal Gift Aid tax reclaims cannot be made by the charity.
• The company will get tax relief through lower corporation tax (the donation is a deduction from taxable profit).
• If payment is made to a non-UK charity you should ensure that you have sufficient documentation to satisfy HMRC that payment is being made to a proper overseas charity.