CTM09060 - Corporation Tax: charitable donations relief: formerly charges on income: Gift Aid
CTA10/S189 and CTA10/S191
CTA10/S189 provides for relief to companies for qualifying donations - payments to any of the following qualifying bodies:
- a charity within the meaning of FA10/SCH6/Part 1, or
- an eligible body mentioned in CTA10/S468, for example the British Museum, or
- a Scientific Research Association within CTA10/S469.
This relief is known as Gift Aid.
Refer any doubts about the status of a body to HMRC Charities.
The relief applies to payments made on or after 1 April 2000 that are not otherwise deductible in computing profits for Corporation Tax (CT) and which are not distributions.
Companies do not deduct tax from the gifts and so make gross payments to charities.
A payment made with a view to securing relief under CTA10/S189 is an annual payment in the hands of the recipient, even if the recipient is not a qualifying body as defined above or the paying company is not entitled to relief.
A payment is a qualifying donation only if all of the following additional conditions are satisfied:
- the payment is not made subject to any conditions as to repayment;
- neither the company nor any connected person receives a benefit in excess as the limits set out below* in consequence of making the payment; and
- the payment is not conditional on, or associated with, or part of an arrangement involving the acquisition of property by the charity (otherwise than by way of gift) from the company or a connected person.
*The maximum benefits that close companies or connected persons may receive in consequence of the payment are as follows:
Amount of donation | Value of benefits |
|---|---|
£0 - £100 | 25% of the donation |
£101 and above | 25% of £100 Plus 5% of £101 up to a total benefit value of £2,500 |
Companies wholly owned by a charity (CTA10/S191) may claim relief for payments made up to nine months after the end of the accounting period for which relief is claimed.