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HMRC internal manual

Business Income Manual

Specific deductions: subscriptions: annual subscriptions to charities by employers

S34(1) Income Tax (Trading and Other Income) Act 2005, S54(1) Corporation Tax Act 2009

An ordinary annual subscription by an employer to a charity, claimed as made for the benefit of his employees, may be allowed as a trade expense where:

  • the availability of the charity to his employees or their immediate dependants can reasonably be regarded as a direct and valuable advantage to the employer’s business, and
  • the subscription is not of such magnitude that it can only be regarded as arising from munificence (see Bourne & Hollingsworth Ltd v Ogden [1929] 14TC349 and BIM37510).

Reasonable annual subscriptions made by an employer to, for example, a general hospital in the locality of his place of business, or to a trade charity maintained primarily for the benefit of employees in the employer’s type of trade, are within this category. It can also cover subscriptions made to charities of benefit to a specific section of the employees.

Charity special appeal

A claim to deduct a special contribution made to a charity in response to a special appeal may be allowed if an annual subscription would be allowed as above, provided that:

  • the employer has been or has become an annual subscriber,
  • the proceeds of the appeal are to be used to meet revenue as opposed to capital expenditure, (to be decided by the office handling the charity’s tax affairs), and
  • the amount is reasonable.

Chartered Accountants Benevolent Association

Contributions to The Chartered Accountants’ Benevolent Association (CABA) by accountancy firms who employ members of the Institute of Chartered Accountants of England and Wales or Institute students may normally be allowed in computing profits for tax purposes. The contributions in any year should not exceed an amount equivalent to the annual subscription of a voting member of the Association, for each Institute member or student so employed.