Below are examples taken from HMRC (Giving to Charity) of how your company and your employees can support Al-Mustafa Welfare Trust®
Sole Traders or Partnerships
If you’re a sole trader (self-employed) or a partner in a business, you pay Income Tax as an individual on your business profits. So you can take advantage of the tax relief on gifts of money to charity that are available to individuals and can claim them on your Self Assessment tax return.
If you wish to give money to Al-Mustafa Welfare Trust® you can use Gift Aid. This increases the value of your donation to our charity at no extra cost to you – by allowing them to reclaim basic rate tax on your gift. If you pay higher rate tax you can claim extra relief on your donations. In order to make a Gift Aid donation you’ll need to opt-in to the Gift Aid declaration as provided on all our downloadable forms and online donations.
Companies can get tax relief on gifts of money to charities. The relief works differently than for individuals, self-employed sole traders and partnerships.
Gifts of money made to a charity by your company should be paid gross – before tax is deducted. These donations are deductible from the total profits of your business when calculating Corporation Tax.
The charity doesn’t need to make a Gift Aid tax repayment claim because no tax has been paid. The charity can claim exemption from tax on company donations.
Land, Building or Shares
Offering gifts in the form of land, buildings or shares
Your company could benefit from Corporation Tax relief if it gives land, property or qualifying shares to a charity, or sells them to a charity at less than their market value.
Corporation Tax relief
Your company can get relief from Corporation Tax at its highest rate on gifts (or sales below market value) to charity of:
- Shares or securities which are listed on any recognised stock exchange. This includes London and PLUS-listed in the UK and any recognised overseas stock exchange.
- Shares or securities dealt in on any designated market in the UK. The only markets so designated currently are the Alternative Investment Market (AIM) of the London Stock Exchange and the PLUS-quoted market of PLUS Markets.
- Units in an Authorised Unit Trust (AUT).
- Shares in a UK Open-Ended Investment Company (OEIC).
- Holdings in certain foreign collective investment schemes – generally schemes set up outside the UK that are similar to AUTs and OEICs.
- A qualifying interest in land.
Your company can’t get relief for gifts of its own shares.
Corporation Tax is normally payable on capital gains made when land, buildings or shares – or any other asset other than money – is given away or sold at a profit.
If your company makes an outright gift – something given without expecting anything back in return – of an asset to a charity, there is no Corporation Tax to pay on any capital gains. This is because, when the gift is made, the transaction is treated as having taken place for an amount that results in no gain and no loss for the donor company.
How to give land, buildings or shares to a charity
First you need to contact your chosen charity (i.e. Al-Mustafa Welfare Trust) to make sure it can accept your gift.
If you want to give shares you need to complete a stock transfer form to:
- take the shares out of your company name
- put them into the charity’s name (i.e. Al-Mustafa Welfare Trust)
If you want to get Corporation Tax relief for giving land or property you must obtain a certificate from the charity.
This must contain the following:
- a description of the qualifying interest in land or property that has been given or sold to the charity
- the date of the disposal
- a statement confirming that the charity has acquired the qualifying interest in the land or property
A ‘qualifying interest’ means a freehold interest in land or a leasehold interest in land.
You must transfer the whole of your interest in that land or property to the charity. For example, you can’t give your property to charity and continue to live in it. In the situation where two or more persons hold the property, all of the joint owners must dispose of their interest in the property to the charity at the same time if any of them are to claim relief.
Equipment. Stock or Help
Offering gifts in the form of company equipment, trading stock or staff help
Your business can get tax relief if it makes a gift of equipment or trading stock to a charity (i.e. Al-Mustafa Welfare Trust). You’ll be able to reduce the taxable profits your business makes by the cost of the gift made so you’ll pay less tax. This applies whether you’re in business as a sole trader, a partnership or a company.
Your business can get tax relief for the costs of temporarily transferring an employee to work for a charity (i.e. Al-Mustafa Welfare Trust) – on ‘secondment’.
Sponsoring (Business Donation)
It’s quite common for companies to agree sponsorship deals with charities. Companies usually get something in return for a sponsorship payment, for example by linking your company name (as sponsor) with the charity or project could give your company valuable publicity.
Sponsorship payments that your company make in return for something from the charity are treated differently for tax purposes from simple donations. The way they’re treated, and whether or not your company can claim tax relief for them, depends on the nature of the sponsorship arrangement and on the particular circumstances.Download Business Donation Form
Payroll Giving is a way for your employees to make regular payments to charity directly from their pay. People who receive their company/personal pension through PAYE (Pay As You Earn) can participate too.
Payments that your employees make through a Payroll Giving Scheme are deducted from their pay before tax is deducted. This means that employees are given tax relief on their donation immediately – and at their highest rate of tax.
It’s easy to set up a Payroll Giving Scheme for your business. There’s little in the way of cost and administration, and you’ll probably be able to adapt your existing payroll system to operate the scheme. For more information on companies that can help set-up Payroll Schemes visit our Alternative Donations page.