By Helen Sewell, Accountant at Hive Business
Have you ever thought about why you do (or don’t) do it?
One research paper found that for 85% of charitable donations people gave simply because someone asked them to.
And the chances are, especially at this time of year, someone is asking you to consider donating to charity. It might be a link on Facebook to do a reverse advent calendar for a Foodbank. Or an advert on TV. Or your mate doing Movember or Dry January in return for sponsorship.
So let’s be smart about this. You want your money to be put to work in the most efficient way and donating to charity is no different. And you’re not a robot. Your motivations for giving will be as mixed as any other decision. There may be a plethora of reasons donate, not just because you were asked. And a bit of tax relief might be one of them.
Donate from your limited company
Charitable donations can be made directly from your limited company thus avoiding the need to extract the profits first (and suffer personal tax). It will also attract corporation tax relief as the donation will be deducted from your income to calculate taxable profits. Win-win.
Register for gift aid
If you are donating cash as an individual, make sure you fill out a gift aid form for the charity, enabling them to add an extra 25% to your gift courtesy of the Chancellor. Gift Aid is the mechanism used to redirect your income tax away from the Treasury and to the Charity instead.
The charity can only claim the equivalent of the basic rate of tax. So if you’re a higher rate tax payer, be sure to include all your charitable donations on your tax return to claim the difference.
Encourage your staff
Make it easy for your staff to contribute to charity by setting up Give as you Earn through your payroll. Or allow them to volunteer in work time once or twice a year in the local community. This can raise the profile or your business, motivate your staff and you can still treat the staff cost as a business expense in your accounts.
If you would like to find out more information about ways you can donate to charity from your business please get in touch on 01872 300232 or email [email protected].
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