Reply to: Charity Donation through LTD Company

[Jessica@WhiteFieldTax]

Not sure how charity donations pass the "wholly exclusively and necessary" test but there you go...

Larger ones = corporate gift aid = wholly and exclusively doesn't apply.

Smaller ones = no one really cares, including tax man, unless its egregious (eg "donation" to sports club and your personal annual membership is waived)

One thing to bear in mind is there are two tests "wholly and exclusively" which applies to deductions against business profits and "wholly, exclusively and necessarily" which applies for deductions against earned income (in the case of a typical small company, this is the directors personal tax and expenses from P11D). The point is W&E doesn't include necessary so a small donation to the local Brownies, so long as there is no personal nexus, is W&E even if not necessary.

[CloudWalker]

"Its all about Charity mate"

[PerfectStorm]

It depends on how you are going to account for it.

If the donation is a corporate donation, made directly from the company bank account, then you can't gift aid it.

If the donation is a personal one, made from the company bank account via a loan to the director or as a benefit in kind or in lieu of salary outstanding, then you can gift aid it.

So all in all then, best thing to do would be to make a personal donation, gift aid it, then the charity gets 25% rather than 20% (and it looks better on paper).

Not sure how charity donations pass the "wholly exclusively and necessary" test but there you go...

[TheFaQQer]

So if you make a donation from your company debit card, does this mean you must NOT tick the Gift Aid box?

It depends on how you are going to account for it.

If the donation is a corporate donation, made directly from the company bank account, then you can't gift aid it.

If the donation is a personal one, made from the company bank account via a loan to the director or as a benefit in kind or in lieu of salary outstanding, then you can gift aid it.

[PerfectStorm]

So if you make a donation from your company debit card, does this mean you must NOT tick the Gift Aid box?

[Jessica@WhiteFieldTax]

Thanks for the reply. I already donated using Gift Aid as it worked out marginally better for the charity.

But to be 100% clear on this issue for the future, if i was to donate via the company, would i have to use the business name, or can i still use my own name (Director) on the sponsor forms?

If you are donating via the company, then company.

[TykeMerc]

Thanks for the reply. I already donated using Gift Aid as it worked out marginally better for the charity.

But to be 100% clear on this issue for the future, if i was to donate via the company, would i have to use the business name, or can i still use my own name (Director) on the sponsor forms?

For the avoidance of doubt and since you mention a receipt I'd either put the Business name or if they insist on a persons name I'd put the business name in brackets somewhere in the name field.

[gaz0001]

In practice smaller amounts to non registered charities can be deducted against CT if made by YourCo so long as there is a business nexus - for a small amount the business nexus could be as simple as "it seemed the right thing to do".

So £50 for Bike Ride for Cancer probably OK
£500 to the same may get closer scrutiny relative to your profits - OK for a larger business
£1,000 to cover your hotel and bike hire costs whilst you do said bike ride - doesn't work as the nexus is more personal

Thanks for the reply. I already donated using Gift Aid as it worked out marginally better for the charity.

But to be 100% clear on this issue for the future, if i was to donate via the company, would i have to use the business name, or can i still use my own name (Director) on the sponsor forms?

[Jessica@WhiteFieldTax]

Hi,

I have read online on the gov website that Charity Donations to Real charity's are tax deductible.

I can count them as an expense.

Just a standard donation, ie, Bike Ride for cancer research, and i donate £50, i get nothing back at all, apart from contributing to a worthy cause.

I have a couple of questions regarding this:
1. When i put my name down on the sponsorship form, do i put my own name as normal or do i now need to put down my LTD company name?
2. For the newer style charitys, its done purely online, the sponsorship form, and i donate using my business card. So essentially, i have an email receipt and a transaction directly from my Business Account. But, for the old method, of the paper sponsorship form....usually you pay cash....obviously there is no receipt. How do you go about this one?

Thanks in advance

In practice smaller amounts to non registered charities can be deducted against CT if made by YourCo so long as there is a business nexus - for a small amount the business nexus could be as simple as "it seemed the right thing to do".

So £50 for Bike Ride for Cancer probably OK
£500 to the same may get closer scrutiny relative to your profits - OK for a larger business
£1,000 to cover your hotel and bike hire costs whilst you do said bike ride - doesn't work as the nexus is more personal

[TheFaQQer]

Not at all.

Please read the thread, stop being an <modsnip>.

<correct English for the yank spelling that was modsnipped>

[northernladuk]

Yes! I think the point the OP was making is that by giving as a company contribution they can get the warm fuzzy feeling and reduce the corp. tax bill.

However if the company contribution was going to be £100 and they gift aid £80 personally instead then the charity still receives £100 but they would get the same fuzzy feeling and typically this would be marginally more tax efficient overall compared to the company donation.

Indeed but that's not a personal benefit. It's one to the company which is a different entity

[Contreras]

Isn't that the point of giving to charity????

Yes! I think the point the OP was making is that by giving as a company contribution they can get the warm fuzzy feeling and reduce the corp. tax bill.

However if the company contribution was going to be £100 and they gift aid £80 personally instead then the charity still receives £100 but they would get the same fuzzy feeling and typically this would be marginally more tax efficient overall compared to the company donation.

[gaz0001]

So you expect personal benefits from giving to charity?

Not at all.

Please read the thread, stop being an <mod snip>

[northernladuk]

So you expect personal benefits from giving to charity?

[gaz0001]

Isn't that the point of giving to charity????

Yes, thats the point. I was simply clarifying that i was not receiving any kind of benefit from this personally.

That is the point.

Whats your point?