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HMRC internal manual

Business Income Manual

Wholly and exclusively: case law: subscriptions and donations: charitable gift to hospital

S34 Income Tax (Trading and Other Income) Act 2005, S54 Corporation Tax Act 2009

The more the expenditure could be for general philanthropic purposes the more likely it is to be non-allowable

In the case of Bourne and Holingsworth Ltd v Ogden [1929] 14 TC 349, the High Court refused a deduction for certain subscriptions made by the company to the nearby Middlesex hospital. The Inspector had allowed previous subscriptions but the dispute concerned an abnormally large payment.

Rowlatt J brought out the element of munificence or beneficence which is often present in charitable giving and which can be a purpose in addition to any business purpose. The more the expenditure could be for general philanthropic purposes, the greater the likelihood of a non-business (and so non-allowable) purpose.

As far as unincorporated businesses are concerned, donations to charity can be made personally by the trader or partner via Gift Aid and a company making donations to a charity may obtain relief from Corporation Tax in respect of those donations. See also the guidance in BIM45072.