Donations In-Kind of Goods & Services
If you choose to donate ‘in-kind’ by donating equipment or services you are still eligible to claim tax relief on these donations, but it works in a slightly different way to monetary donations. We will aim to keep this page up to date, but prior to any donation you should first consult your accountant, tax advisor or HMRC. This page was last updated in January 2013. For more information please see the HMRC website here.
By donating equipment you can reduce the taxable profits of your business by the cost of the donation. This is available to all businesses, whether you are a sole trader, a partnership or a company.
In addition, your company can claim tax relief for the ‘secondment’ of employees to us, such as for volunteering opportunities or where you are fulfilling your CSR aims by providing volunteering placements.
Donations of Equipment
You may be able to benefit from full capital allowances on any equipment you donate. Generally speaking, you must have used the equipment at some point in your normal business work to qualify for this relief. It must also be considered ‘plant and machinery’ for capital allowance purposes, but this term extends to things like office furniture, computers, printers, assorted IT equipment and vehicles. Tax relief is given bringing a ‘nil disposal value’ to your capital allowances, rather than having to base things on market value. For more information on Capital Allowances please consult the HMRC website here.
Donations of Stock
By donating stock, or anything your business makes or sells, you can claim the cost of the donation in your business accounts. You don’t have to include these items in your income and consequently can reduce your taxable profits by the full cost of the donation. This is not the same as a ‘notional trading receipt’ where donations may be made to other organisations but can not be claimed against taxable profits. You’ll still need to account for VAT on the donation unless you give it to us for one of the following purposes;
- To sell
- To hire out
Secondment & Employee Volunteering
If you place one or more of your employees with us on ‘secondment’ or for volunteering purposes, even if we place them with another community organisation to help fulfill a volunteering aspect of your Corporate Social Responsibility, you can treat the cost as a business expense. You can still include them in your taxable business profits as if they were still working at their usual place of employment. This includes their salary, employers national insurance and any business expenses incurred. You should remember that you will still need to operate PAYE as before.
Purchase of Goods For Donation To Charity
If you purchase goods or services which are then donated to charity then it won’t be included as a business activity for VAT purposes, meaning that you won’t have to account for VAT on the items you’ve purchased to donate. However, you won’t be able to claim back any VAT on these items either.