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Tax Effective Giving

Tax Effective Giving

When supporting Skylarks through a financial donation, it makes sense to do it in a tax-efficient way.

As such, one of the most immediate and tangible benefits to your business from donating to charity is being able to get tax relief.

The tax relief you receive will depend on what donation you make and how you make it.

The following is not meant to be advice for businesses or individuals on donating tax effectively to Skylarks. Please consult a fully qualified professional.

Donating to charity through a limited company

When companies make gifts of money to charities, they are able to gain tax relief.

This charitable giving tax relief works slightly differently than that for individuals, sole traders and partnerships and will see the company pay less corporation tax.

There are certain qualifying conditions to this tax relief, which dictate that:
  • the payment must not be a loan that will be repaid by the charity
  • it must not be a distribution of company profits (e.g. dividends)
  • any benefit that you’re given in return must be below a certain value (see below).

Benefits in return for a donation:
  • For donations up to £100: the maximum value of benefit would be 25% of the donation.
  • For donations between £101 and £1,000: the maximum value of benefit would be £25.
  • For donations of £1,001 and over: the maximum value of benefit would be 5% of the donation (up to a maximum of £2,500).

This applies to benefits given to any person or company connected with your company, including close relatives.

If you’re given something in return

Any benefits you’re given in return for your donation (e.g. tickets to an event) must be below a certain value.

Sponsoring Skylarks

Charity sponsorship payments are different from donations because your company gets something related to the business in return.

You can deduct sponsorship payments from your business profits before you pay tax by treating them as business expenses.

What could you sponsor?
  • Our weekly enewlsetter to our members – of which we have over 4,000
  • Website pages, or our entire newsletter
  • Fundraising events - such as one of our overseas challenge cycles, or a fundraising event.

Your sponsorship helps lower the costs of our fundraising events, which means more of the money raised by our supporters can go towards the most important thing we do – supporting children and young people with additional needs and their families.

In return you’ll get publicity on our website and social media channels, as well as in local press, newsletters, leaflets, and a presence at our events. This will put you in direct contact with thousands of customers in your community. But there are ways we might be able to help you, too. We could talk to your employees about what we do, providing seminars around neuro diversity, or providing support for employees that might have children with additional needs or who’s wider family, friends and networks may have.

What qualifies as business expenses?

Payments qualify as business expenses if Skylarks:
  • publicly support your products or services
  • allow you to use our logo in your own printed material
  • allow you to sell your goods or services at our event or premises
  • links from our website to yours.
If you’re unsure whether a charity payment qualifies as a sponsorship payment or a donation, go to the HMRC support page on GOV.UK.

Equipment and trading stock

Your limited company pays less Corporation Tax if it gives equipment or items it makes or sells (‘trading stock’) to us.

Giving equipment
You can claim full capital allowances on the cost of equipment.
To qualify, the equipment must have been used by your company. This includes things like:
  • office furniture
  • computers and printers
  • vans and cars
  • tools and machinery.

Giving trading stock
If your company donates its trading stock to us, you don’t have to include anything in your sales income for the value of the gift. This means you get tax relief on the cost of the stock you’ve given away.

If your company is VAT-registered, you’ll need to account for VAT on the items you give away.

However, you can apply zero VAT to the items (even if you normally charge the standard or reduced rate) if your company makes the donation specifically so that the charity can:
  • sell the items
  • hire out the items
  • export the items.
This means you can reclaim the VAT on the cost of the trading stock you donate.

If you can’t zero rate the items, use the VAT rate you normally apply to them.

Next steps

To explore this further, without obligation, please contact our team by emailing