Skip the primary navigation if you do not want to read it as the next section.
Skip the main content if you do not want to read it as the next section.
Businesses can obtain tax relief when they give money, whether as a one-off or a regular payment, under the Gift Aid scheme. It applies to donations of money of any amount to UK charities, and the HM Revenue & Customs Leaflet IR64 - Giving to Charity by Businesses - provides further details.
How does it work?
The way you receive tax relief, via the Gift Aid Scheme, depends upon whether the business is a company, a sole trader or a partnership.
For companies
To give through Gift Aid, a company simply gives the money to charity. The company does not deduct any tax from the donation and does not need to make a Gift Aid declaration to the charity. Tax relief is given by deducting the amount of the donation from profits prior to calculating corporation tax. For further details about the effect of a donation on corporation tax liability, contact your company's tax office or accountant. Unlike Gift Aid donations from individuals, when a business gives through Gift Aid, the charity is not entitled to reclaim any tax against the value of that donation.
For the self-employed
Gift Aid donations from the self-employed (sole traders) are treated in the same way as Gift Aid by individuals. Therefore, the donation will be treated as paid out of taxed income and the charity will reclaim basic rate tax on it from the HMRC. The trader will be required to complete a Gift Aid declaration for the charity. A higher rate taxpayer can obtain relief on the difference between the basic rate and the higher rate of tax on the gross amount of the gift by the gift on his tax return.
For partners
Gift Aid donations received from businesses that are run as partnerships are treated as donations of equal amount from the individual partners, unless the partnership decides to split them in different proportions.
Unless one partner has power under the partnership agreement to make a Gift Aid declaration on behalf of the partnership, a Gift Aid declaration will be required from each partner. This can be done on one form provided it includes each partner's details. (The position is different in Scotland where a partner may make a Gift Aid declaration on behalf of the partnership by simply showing the partnership's name and address).
What do I look out for?
For companies that give through Gift Aid, there is no limit on what benefits may be given from the charity in return. However, for a "close company" (controlled by five or fewer people), partnerships and the self-employed, there are limits on the value of any benefits that a charity may give in return. The limits are the same as those that apply to Gift Aid donations by individuals.
Can I receive any benefits in return for my gift?
Some charities, particularly those which have membership schemes, like to acknowledge their donations with some small gift in return, such as a book. This is acceptable as long as whatever the charity gives (or anyone connected with the donor, such as a relative) in return for the donation is within the limits below.
| Amount of donation | Value of benefits |
| £0 - 100 | 25% of the value of the gift |
| £101 - 1,000 | £25 |
| £1,001 - 10,000 | 2.5% of the value of the gift |
| Over £10,000 | £250 |
The total benefits you receive from one charity in the same tax year must not exceed £250. If you receive benefits which exceed the above figures, then the donations will not be within Gift Aid. That means that the charity will not be able to reclaim basic rate tax and you will not be able to claim any higher rate relief on your gift.
© Copyright 2007 Association of Charitable Foundations (ACF)
Every effort has been made to ensure that the information provided in A Guide to Giving is current at the time of publication (October 2005), but the Association of Charitable Foundations (ACF) cannot guarantee its accuracy. Furthermore, there may have been subsequent changes to legislation, policy and/or to tax bands and rates. If you are considering any investment you should seek appropriate professional advice. This guide is not intended to replace professional advice on particular investments or the manner in which tax relief is applied under any scheme, and you should not rely on it for such purposes. You are responsible for your own tax and financial affairs and so should seek independent advice. ACF can not accept responsibility for the investment choices you make.
Views expressed in A Guide to Giving are not necessarily those of Philanthropy UK or the Association of Charitable Foundations.
Coutts & Co is not responsible for the content of A Guide to Giving, and the content does not constitute any advice whatsoever from Coutts & Co. The case studies and profiles within the Guide are not necessarily clients of Coutts & Co. Coutts & Co shall not be liable for any loss whatsoever arising from your reliance on any information produced in the Guide.
