Does anyone here make charitable donations through their company?

[WordIsBond]

Context, details and sector will be everything. Sometimes it’s possible, sometimes it’s not.

In other words, give my accountant all the details and discuss with him.

[Alchemy Accountancy]

Has anything changed in the last decade or so that means maybe it used to be a bad idea to give corporately but not isn't (or vice versa?)

It used to be slightly more tax efficient (subject to a couple of assumptions) to make gift aid donations personally - this was to do with how the basic rate band extension worked along with the dividend tax credit (if my memory serves me right). Since the removal of the tax credit a few years ago, it is now slightly more tax efficient to make these donations via your limited company - the differences are pretty small in any case.

[Jessica@WhiteFieldTax]

So, I've often thought about this one. I'm recognised as an officer of, and contribute regularly and sometimes heavily, to a not-for-profit community organisation which is not a registered charity.

I've never done this through the company because it isn't a registered charity and because someone might try to argue that I'm 'benefiting' from the organisation. The latter would be a stretch, I'm putting far more in than I get out, I receive no remuneration, and any 'benefit' is self-satisfaction rather than anything measurable.

Am I being overly cautious?

Context, details and sector will be everything. Sometimes it’s possible, sometimes it’s not.

[Jessica@WhiteFieldTax]

Jessica... How you doin'?

Funny you should ask...

Been finishing the Masters from Hell, and in particular the final six months project squeezed into six weeks - because accountants have Plan Bs as well....

...and then I’m in hospital 24 hours out from a knee replacement...

Apart from that grand

[northernladuk]

Yes, registered several charities over the years, doing one now.

An individual can’t set themselves up as a charity. But I think you knew that and were being ironic.

Jessica... How you doin'?

[WordIsBond]

So, I've often thought about this one. I'm recognised as an officer of, and contribute regularly and sometimes heavily, to a not-for-profit community organisation which is not a registered charity.

I've never done this through the company because it isn't a registered charity and because someone might try to argue that I'm 'benefiting' from the organisation. The latter would be a stretch, I'm putting far more in than I get out, I receive no remuneration, and any 'benefit' is self-satisfaction rather than anything measurable.

Am I being overly cautious?

[Jessica@WhiteFieldTax]

Anyone know how and individual can set themselves up as a charity please?

Yes, registered several charities over the years, doing one now.

An individual can’t set themselves up as a charity. But I think you knew that and were being ironic.

[northernladuk]

Anyone know how and individual can set themselves up as a charity please?

[ContractorBanking]

I'm with you on this one - I was asking a genuine question, although I can see why you were nervous.

Charity in question is a hospital we've all heard of and there's no personal benefit.

Thanks for the advice, very useful.

Questions like this always make me a bit nervous. For normal donations to proper charities, you're fine. Inevitable caveat that if you (or anyone reading) is thinking about gifting a load of their company's money to their mate/mum/whatever who's really needy so sort of like a charity, then nope. There are no doubt some other specific exclusions for niche situations, in particular if you have some kind of relationship with the charity and/or get some kind of benefit in return for making the donation.

[vwdan]

I've given quite a bit to Ronald McDonald and the Childrens Hospital via my Ltd Co. I just make it clear it's from a company and don't do the gift aid thing.

I'm not particularly fussed by the CT side, but it's lot better than faffing about with dividends and all that entails IMHO

[Maslins]

Btw, are there any rules regarding how much you can give and to whom? I assume as long as its a UK registered charity it's fine.

Questions like this always make me a bit nervous. For normal donations to proper charities, you're fine. Inevitable caveat that if you (or anyone reading) is thinking about gifting a load of their company's money to their mate/mum/whatever who's really needy so sort of like a charity, then nope. There are no doubt some other specific exclusions for niche situations, in particular if you have some kind of relationship with the charity and/or get some kind of benefit in return for making the donation.

[ContractorBanking]

That's interesting. I always thought personal donations were more tax efficient but it seems there's not much in it if donating through company.

Btw, are there any rules regarding how much you can give and to whom? I assume as long as its a UK registered charity it's fine.

We tend to recommend company charitable donations rather than personal ones.

Key thing (which your quote points out) is corporate donations don't qualify for gift aid...but they do get corporation tax relief for your company (subject to you having sufficient taxable profits...donations work a bit differently to normal business expenses).

It basically ends up that you gifting £80 personally is broadly the same for both you and the charity as your company gifting £100.

Another side benefit of giving via your company is keeping track of it. If you use FreeAgent, happy days, just tag the cost as "Payment" --> "Charitable donation". No need to keep a separate tally somewhere and ensure you remember to mention it when doing your self assessment (which is often the case if you pay personally, as your accountant typically won't have access to your personal bank statements).

[Maslins]

We tend to recommend company charitable donations rather than personal ones.

Key thing (which your quote points out) is corporate donations don't qualify for gift aid...but they do get corporation tax relief for your company (subject to you having sufficient taxable profits...donations work a bit differently to normal business expenses).

It basically ends up that you gifting £80 personally is broadly the same for both you and the charity as your company gifting £100.

Another side benefit of giving via your company is keeping track of it. If you use FreeAgent, happy days, just tag the cost as "Payment" --> "Charitable donation". No need to keep a separate tally somewhere and ensure you remember to mention it when doing your self assessment (which is often the case if you pay personally, as your accountant typically won't have access to your personal bank statements).

[d000hg]

I've always made charitable donations (reasonably substantial i.e. not the odd £5) personally as I'm sure when I started my company, there was a good reason why which I've now forgotten.
However the treasurer of a local charity I give to, who is also a friend and a trainee accountant, suggested making the donations from the Ltd might be just as good.

Let me just quote his words verbatim so I don't mis-explain:

logically it should be absolutely fine to do this. It’s a tax deductible expense in the company, we don’t claim giftaid but as it’s tax deductible you can just give a ‘gross’ amount, and skip the middle man being HMRC.

You’d save tax at the CT rate of 19% (depending on the company year end). This is marginally less than the 20% giftaid relief so it is slightly less efficient but it’s an alternative option.

Chapter 3: Gift Aid - GOV.UK

It’s actually probably more efficient as you save the 19% CT and the IT on extraction as well.

I'm not sure the very last point makes any odds since my HR tax-band increases to accommodate personal giving but that aside, has he missed something here? For instance anything specific to IR35/PSC which might not be an area he works with doing corporate accounts?

Has anything changed in the last decade or so that means maybe it used to be a bad idea to give corporately but not isn't (or vice versa?)