A growing number of Shropshire companies are donating cash to charity this year instead of sending out Christmas cards – but are they reaping the tax benefits?
“By following just a few basic guidelines, donations to charity can be a win-win situation for both parties,” said our Tax and Small Business Manager, Martyn Bramwell.
“Even though times are tight for everyone, many companies are keen to show their support for local causes at this time of the year.
“Donations, if recorded in the proper manner, can trigger tax benefits for a company but it’s important that businesses don’t find themselves coming under the taxman’s spotlight because of their Christmas cheer, by failing to follow a few simple rules.”
Martyn added “The most tax-efficient way to contribute to a charity is defintely via a cash donation.
“Providing your business receives no business advantage in return, such as advertising at an event which the charity might subsequently hold, the value of any donation can be deducted straight from corporation tax profits, with no questions asked.
“It’s important, though, to make sure you keep good evidence of the donation. A simple public acknowledgement such as a letter, receipt for online payment, or a mention in the charity’s newsletter, will suffice.”
Martyn also said there was nothing stopping a company highlighting their own links with a charity on either a website or email.
But he said: “A straightforward donation is by far the most tax-efficient way to support charity.
“If you get into the realms of sponsorship, the situation is far more complex, as HM Revenue and Customs has rules about how it is treated, depending upon the nature of the sponsorship and the circumstances surrounding it.
“The overall message to companies is, if you want to support a charity, making a straightforward donation can be a win-win situation for both parties.”
Martyn Bramwell, Tax and Small Business Manager