Charity payment from company funds

[computerguru]

Hi All,

Lets say myco (IT Contractor) has earned 40K in one year. Out of this if i want to pay lets say 5K to a registered charity, Can I pay it from my company accounts directly and consider it as expenses. Or do i have to transfer this to my accounts as dividends and then pay to the charity (of-course this also means my personal tax implication).

Also, same question for a non-registered charity e.g. if i want to pay (as gift) to some poor person, can I pay it using the company accounts and consider it as expenses.

Any help will be highly appreciated.

Thanks

[Bunk]

Also, same question for a non-registered charity e.g. if i want to pay (as gift) to some poor person, can I pay it using the company accounts and consider it as expenses.

The first bit was a reasonable enough question. That bit though,

[Goatfell]

Company donation to a registered charity - charity loses out on Gift Aid.
Non registered charity (i.e. your mate) - just wrong on so many levels...


Good explanation here:
http://forums.contractoruk.com/accou...eductable.html

[DimPrawn]

https://www.gov.uk/tax-limited-compa...arity/overview

Basically it lowers your corporation tax as it reduces your profit if you donate via a LTD company.

[DimPrawn]

Company donation to a registered charity - charity loses out on Gift Aid.
Non registered charity (i.e. your mate) - just wrong on so many levels...


Good explanation here:
http://forums.contractoruk.com/accou...eductable.html

Charity doesn't need gift aid, as company donates gross, there is no tax to pay on LTD donating to registered charity.

[computerguru]

The first bit was a reasonable enough question. That bit though,

Sorry, why you think it is funny? I asked this for a reason. I know of a person who is ill and I would like to contribute some £££ for his healthcare. is there anything wrong/funny about it?

[eek]

Sorry, why you think it is funny? I asked this for a reason. I know of a person who is ill and I would like to contribute some £££ for his healthcare. is there anything wrong/funny about it?

Yep, you really shouldn't do it via the business. You can do it on a personal basis but the separate legal entity (your company) has to be treated as the emotionless professional legal entity it is supposed to be...

[TykeMerc]

You can't just give some person money (no matter how sick or deserving they are) and treat it as a business expense, I'm a bit boggled how you think it could be possible.

If the person is a registered charity then it would be possible, but that's not an expense, that's a donation to a charity which is allowable and reduces your taxable profit.

[northernladuk]

You have also got to make sure you are not connected to the person/charity or gaining benefit from it in any way. Donating it to the local football club your son plays for won't wash etc.

Giving such a large chunk of your money looks extremely fishy IMO.

[TheCyclingProgrammer]

Sorry, why you think it is funny? I asked this for a reason. I know of a person who is ill and I would like to contribute some £££ for his healthcare. is there anything wrong/funny about it?

As has been pointed out - giving a donation to a registered charity is fine. Giving money to a friend to pay for their healthcare - not tax deductible.