Tax when your limited company gives to charity
Equipment and trading stock
Your limited company pays less Corporation Tax if it gives equipment or items it makes or sells (‘trading stock’) to a charity or community amateur sports club (CASC).
Giving equipment
You can claim full capital allowances on the cost of equipment.
To qualify, the equipment must have been used by your company. This includes things like:
- office furniture
- computers and printers
- vans and cars
- tools and machinery
Giving trading stock
If your company donates its trading stock to a charity or CASC, you don’t have to include anything in your sales income for the value of the gift. This means you get tax relief on the cost of the stock you’ve given away.
VAT
If your company is VAT-registered, you’ll need to account for VAT on the items you give away.
However, you can apply zero VAT to the items - even if you normally charge the standard or reduced rate - if your company makes the donation specifically so that the charity can:
- sell the items
- hire out the items
- export the items
This means you can reclaim the VAT on the cost of the trading stock you donate.
If you can’t zero rate the items, use the VAT rate you normally apply to them.