Tax Relief on Charitable Donations


It’s the time of year when many give more generously; charitable donations make their biggest increase during the Christmas period in the UK. What you may not know is that regardless of what time of year it is, you may be entitled to claim a little bit of your donation back from HMRC, by way of tax relief.

In this day and age traditional Christmas cards seem to be a thing of the past. Businesses are showing a preference for sending their best wishes via email and social media; often choosing to donate the money they would’ve spent on branded Christmas cards and giving it to a chosen charity instead.

Most of us have heard of Gift Aid but many of you may not realise that you could be entitled to Tax Relief on your donations.

When you donate to a charity using Gift Aid, the charity can claim basic rate tax on the donation form HMRC. This means that if you donated £100, HMRC will donate 20% of this amount on top, resulting in £125 in total for the charity.

Higher Rate Tax Payer

Are you a higher tax rate payer? If so, you can personally receive tax relief for the extra 20% (the difference between the relief HMRC has claimed and the rate of 40% which you pay.)

Limited Companies

Limited companies can also benefit from making charitable donations; their donations are an allowable expense and as such reduce the company’s taxable profit. Nevertheless, donations to charity cannot create or increase a loss; meaning the donation can only reduce profits.

Do you want to know more?

Tax relief on gifts to charity means that you get something back for giving to a good cause so everyone wins! If you would like to know more about any of the information touched upon in this article the A Wilson Accounting team is happy to help and as always, we will make sure that you are never paying more tax than you need to.

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