Information for companies
Tax benefits of giving
Nobody gives to charity just to reduce their tax bill, but it’s good to know how you can benefit yourself at the same time as giving money to charity
Donations by individuals:
A simple Gift Aid declaration increases the value of your donation. Under the scheme the Richard Burns Foundation can claim an additional 25p from every £1 donated by UK taxpayers. In addition to this, the Government is providing transitional relief of three pence on the pound. So while the RBF will claim 25p from each £1 donated, we will actually receive 28p until March 2011. In addition, higher rate taxpayers can claim tax relief on the gross amount of the donation.
Self-assessment taxpayers, since April 2004, are able to nominate a charity to receive all or part of any tax rebate due to them.
Donations by Companies:
All companies can get tax relief when they give money to UK charities. When a company makes a donation, it gets tax relief by deducting the amount given from profits and pays less corporation tax. In 2010, the main rate of corporation tax is 28%, and the rate for smaller companies is 21%.
The company should retain any correspondence with the charity as evidence of the gift.
From April 2000, all gifts of money qualify for tax relief under the Gift Aid Scheme. There is no limit to the amount that the company can give. The company makes a gross payment to the charity through Gift Aid and deducts the amount when working out its corporation tax.
Gift of Shares:
When an individual gives shares to a charity, they can get:
*Income tax relief on the value of the gifted shares
*Exemption from capital gains tax on the disposal of the shares
With the higher rate of income tax at 40% (or 50% from April 10 for income over £150,000) and capital gains tax at 18%, this can amount to a substantial tax-break.
Companies can claim a deduction on the gift of shares for corporation tax purposes in addition to the relief from corporation tax on capital gains.
Gift of Land and Buildings:
Individuals who donate land or buildings to charity benefit from income tax relief and exemption from capital gains tax, similarly to gifts of shares.
Tax relief is given for the market value of the property as a deduction from the donor's income tax liability for the tax year when the gift is made. The amount that can be deducted is:
*The market value of the property
*Any associated costs of transferring the property, such as solicitor's fees; less any proceeds of the sale, or the value of any benefits received in making the gift.
The income tax relief is in addition to exemption from capital gains tax.
Companies can also claim relief for gifts of land or buildings from their corporation tax liability.