This article was written in collaboration with our partner company K&B Accountancy Group.
While it’s exciting to prepare for holiday celebrations with your friends and family, the festive season is also a time to stop and reflect on the joys and blessings of our lives and share this with those in need. If you are planning to make a donation to a registered charity there are some opportunities to claim tax relief that you should be aware of before making a decision on how you would like to donate.
Donating from your company
Charitable donation to registered UK and EU charities are deductible for corporation tax purposes. You can claim tax relief (19%) by deducting the value of your donations from total business profits before your company pay tax.
Donations are not limited to currency and sponsorship payment, it can also be in the form of an employee on secondment, i.e. if your employees volunteer to work for charity during working hours, you can continue to pay their salary through PAYE and deduct the cost of your companies profit as if they were working for your business.
Making personal charity donations
One of the most tax efficient ways to make a personal donation is through Gift Aid.
Provided your donation is not more than 4 times what you have paid in tax in that specific tax year; donating through Gift Aid means charities and community amateur sports clubs (CASCs) can claim an extra 25p for every £1 you give without costing you any extra. If you pay tax at the higher or additional rate, you can claim the difference between the rate you pay and the basic rate of your donation. For example, if you are a higher tax-rate payer and donated £100 to a registered charity, the charity will receive an additional £25 from the government, which increases your donation to £125. You can then personally claim back £25.00 (£125 x 20%), as the difference between your higher tax-rate (40%) and the basic rate (20%) is 20%.
However, please note that not all donations are eligible for Gift Aid. You cannot claim it on money given to the charity in exchange for goods or services such as charity cards or vouchers. Additionally, Gift Aid is not available on donations from Limited Companies.
Regardless of whether you give a company or personal donation, you need to keep records of every contribution if you want to claim tax relief
But it’s not all about tax relief…
Radio Lollipop is an international charity, which provides care, comfort, play and entertainment to children and young people in hospital. It is run entirely by volunteers who provide a play and interactive radio service for patients and their families to make their stay in hospital more fun.
They have 3 lovely designs drawn by children who have been patients at either Evelina London Children’s Hospital or Great Ormond Street Hospital. The price is £5 per pack this year, and each pack contains 12 cards with 4 of each design included. Every penny from every pack goes directly to the charity to buy games and arts & crafts for the children in the wards.
Please contact us at [email protected] or call on 0207 078 0212 if you wish to support this amazing cause. We can post the cards to you or if you collect the cards from our office, we will donate the postage cost to Radio Lollipop as well!