Donating to Charity Through Your Limited Company: Corporation Tax Relief Explained

Cash gifts to a charity or CASC are qualifying charitable donations. Under Corporation Tax Act 2010 section 189 they are deducted from the company's total profits for the accounting period in which they are made.

Company donations are paid gross, so unlike personal Gift Aid the charity cannot reclaim tax on them (see HMRC's Gift Aid guidance for charities).

The saving is the donation multiplied by the company's Corporation Tax rate. GOV.UK sets the small profits rate at 19% for profits of £50,000 or less and the main rate at 25% above £250,000, with marginal relief in between.

Example: a company with £40,000 of profit gives £5,000 to a charity. Corporation Tax falls by £950; at the main rate the saving would be £1,250.

Relief is limited to the amount that reduces taxable profits to nil. GOV.UK's guidance on claiming confirms that excess donations cannot create a trading loss or be carried to the next return. They can be surrendered as group relief.

According to GOV.UK, relief is not available for:

• loans the charity will repay;
• payments made on condition that the charity buys property from the company or someone connected with it;
• distributions of profit, such as dividends; and
• gifts of cryptoassets, which HMRC does not treat as money.

Any benefit the company or a connected person gets in return must stay within limits: 25% of donations up to £100, £25 for donations of £101 to £1,000, and 5% of larger donations up to a maximum of £2,500.

Yes. If the charity promotes the business, for example by showing your logo, linking to your website or letting you sell at its event, the payment is sponsorship. It is deducted as a normal business expense rather than as a donation.

• Equipment the company has used can still get full capital allowances.
• Trading stock given away does not have to be included in sales, so the company gets relief on its cost. VAT may still be due.
• Land, property or shares in another company are deducted at market value with no tax on the gain. Shares in your own company do not qualify (GOV.UK).

Cash donations go in the "Qualifying donations" box of the CT600, not in the profit and loss expenses. Our Corporation Tax returns service handles this as part of your year end, and the charitable donations calculator gives a quick estimate. You can book a free intro call about our services; advice on larger or non-cash gifts is a paid consultation.