There are special rules in place when a limited company gives to charity. This can include Corporation Tax relief for qualifying donations made to registered charities or community amateur sports clubs (CASC) as including capital allowances for giving away equipment that has been used by a donor company.
However, the rules are different if the company is given something in return for donating, such as tickets for an event.
|Donation amount||Maximum value of benefit|
|Up to £100||25% of the donation|
|£101 - £1,000||£25|
|£1,001 and over||5% of the donation (up to a maximum of £2,500)|
These rules apply to benefits given to any person or company connected with a company, including close relatives.
Charity sponsorship payments are different from donations because the company gets something related to the business in return. A company can deduct sponsorship payments from its business profits before it pays tax by treating them as business expenses.
Payments qualify as business expenses if the charity:
- publicly supports the company's goods or services;
- allows the company to use their logo in company’s printed material;
- permits the company to sell their goods or services at the charity's events or premises; or
- has links from their website to the company's website.