Tax Relief For Sponsoring Charity Runs
Helping those who are in need
Charitable deeds can potentially be enhanced by tax relief or even increase the amount you donate without having to put in more yourself:
Donating from your company
Charitable donations 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
Provided you are a UK taxpayer and your contribution is not more than 4 times what you have paid in tax in that specific tax year; making a personal donation through Gift Aid is one of the most tax-efficient ways to give back. Donating through Gift Aid means charities and community amateur sports clubs (CASCs) can claim an extra 25p for every £1 you give.
If you pay tax at a 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 Gift Aid does not apply to all donations. Monetary contributions given to a charity in exchange for goods or services such as charity cards or vouchers are not eligible for Gift Aid. Also, you cannot claim Gift Aid if your donation is a collection from others even if you are one of the contributors. Gift Aid is not available on donations from limited companies.
Last but not least, whether you give a company or personal donation, you need to keep records of every contribution if you want to claim tax relief.
For any concerns, please do not hesitate to contact us.