Help! does anyone know about companies making donations not to charity?

[Takver]

I'm not quite sure where to put this but hoping some one might know where I could look! DH & run a small business, we want to make a donation from the business to a voluntary organisation that isn't a registered charity (just a small local group). I can find pages and pages on the web about tax treatment of donations to charity but not anything at all about donations to other organisations . . . Has anyone who runs their own business done this - do you do it after tax has been paid (at which point we might just as well make a donation from our own money, I guess - no benefit to the company doing it?)

Maybe I should just ring HMRC but it generally involves such a long wait on the phone I'm not sure its worth any potential tax benefit

I'm no accountant but I would expect they need to be a registered charity. Can your accountant not help you?

We don't have an accountant - we do the books ourselves, and generally its all quite simple to figure out.

I think the answer probably is just that the rules for donations only apply to charities - but I was thinking of all those big companies that give lots of money to political parties and then thinking that I bet they don't pay tax on those £££

The trouble is the people who ask us for donations are generally things like the local school gardening club so aren't going to be a charity!

You're a better woman than I, doing the books yourself. I'm a tiny business and I don't even attempt!

Donations to political parties aren't tax deductible, that I do know. Big companies will consider those an investment anyway.

Lots of tiny tiny organisations are registered charities. Has the group looked into becoming one?

I would have thought that a small donation to a local non political entity would be deductible on the basis that this is for the profile of your business And therefore is wholly and exclusively for trade purposes. If you are a small company it will benefit at the tax rate of 20%. If you are personally a higher rate taxpayer you may be better off paying personally.

Not a higher rate taxpayer - and I think it does make sense for it to come through the business, if nothing else because as you say it is good for local profile. (In fact in the past for such things we have generally given a payment for 'advertising' in a flyer or similar ie having our name listed which I think is legit )

flowery - I didn't know little organisations could be charities - maybe they are, I should ask! I just assumed they weren't

Thanks both :)

Also helpful to know that payments to political parties aren't tax deductible - not that I was thinking of making one!

I guess big companies just see it as an investment in lower taxes for the future

The test here is whether the gift (which I think this is) is wholly and exclusively a cost of the trade or business. From what you are saying - I don't think you could claim that this is wholly and exclusively a cost of the business in which case unfortunately it would be difficult to claim a tax deduction

As you say - it is a lot easier if you make a donation to a UK registered charity

There was a fascinating episode of Planet Money (an American public radio programme / podcast) recently, looking at the return on investment for companies for lobbying the US government for tax breaks. The RoI for the one tax they were able to track in detail was so large it was ludicrous - something like 2000%.

The only way you can offset yourself is if you're a higher rate taxpayer and it's a registered charity. It will only be a relevant deduction in your company accounts if it's a registered charity.

Many thanks all. TBH it isn't going to be that much, its just something that comes up from time to time. I think it is probably much easier to stick to what I normally do which is to give them some money out of my pocket and not worry about it