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HMRC internal manual

Corporate Finance Manual

Interest restriction: tax-EBITDA: Charitable Donations Relief


Deductions for qualifying charitable donations, under CTA10/S189, are excluded from the calculation of adjusted corporation tax earnings when determining a company’s tax-EBITDA.

Qualifying charitable donations made by a company are allowed as deductions from the company’s total profits in calculating the corporation tax chargeable for an accounting period.

Being deducted from the company’s total profits after any other relief from corporation tax other than group relief, the amount of charitable donations relief available is limited to the amount that reduces the company’s total taxable profits to nil.

Further guidance on charitable donations relief can be found at CTM09000.

Effect for tax-EBITDA purposes

Charitable donations relief is one of the qualifying tax reliefs specified as an excluded amount in TIOPA10/S407(3).

Any deductions received for qualifying charitable donations would have the effect of reducing the earned profit of the company for tax-EBITDA purposes, reducing the amount of interest it can deduct.

Consequently, deductions received for qualifying charitable donations under CTA10/S189 should not be brought into account when calculating taxable total profits of the period to determine a company’s tax-EBITDA