Donating to Charity Through Your Company

Supporting charitable causes is not only good for society, but it can also be beneficial for your company’s finances and reputation. If you’re considering donating to charity through your business, there are several important tax rules, methods, and compliance requirements to keep in mind.

This post goes some way to explain how UK companies can make charitable donations in a tax-efficient way, the types of donations allowed, and how to report them correctly to HMRC.

Can a Limited Company Donate to Charity?

Yes. In the UK, limited companies can donate to charity and receive tax relief on qualifying donations. This applies to:

• Cash donations
• Sponsorships
• Equipment and trading stock
• Land, property or shares
• Secondments of employees

These donations must be made to a recognised UK-registered charity to qualify for tax relief.

You can check whether an organisation is a registered charity on the Charity Commission website.

What Are the Tax Benefits?

When a limited company donates to a UK-registered charity, it can usually deduct the full value of the donation from its taxable profits. This lowers the amount of Corporation Tax the company has to pay.

Example:

If your company earns £80,000 in profit and makes a £5,000 charitable donation, only £75,000 will be subject to Corporation Tax. At the standard 25% rate (2025/26), that could result in a tax saving of £1,250.

This applies to most types of donations, including:

• Cash donations
• Land, property, or shares (with additional reporting requirements)
• Sponsorships with no significant benefit to the donor

Important notes:

• VAT cannot be reclaimed on charitable donations, unless the payment qualifies as a business transaction (such as sponsorship with advertising value).
• The donation must be made to a recognised UK charity, and no substantial benefit can be received in return for it to qualify for Corporation Tax relief.

For more detail, see GOV.UK: Tax when your limited company gives to charity.

Methods of Donating to Charity as a Company

Here are the most common ways your business can donate:

1. Cash Donations

This is the simplest method. You transfer money directly to a charity’s account. The amount donated can be deducted from your pre-tax profits when calculating Corporation Tax.

• Must be a monetary donation
• No benefit received in return (e.g., event tickets)

Tip: Keep records of the donation including receipts, bank transfers, and any correspondence with the charity.

2. Sponsorships

Sponsorships differ from donations because your company typically receives something in return (e.g., advertising or PR). These are treated as business expenses, not donations, and can still reduce your Corporation Tax liability.

Eligible sponsorship benefits may include:

• Logos on charity materials or event banners
• Mentions on the charity’s website
• Social media promotion

In this case, your donation is treated as marketing spend rather than a charitable gift.

3. Donating Goods or Equipment

If your company donates trading stock or equipment to a charity, you won’t need to include the value in your turnover. This helps reduce your taxable profits.

• For equipment, such as IT hardware or tools, you may be able to claim capital allowances or avoid balancing charges.
• For trading stock, ensure it is transferred without payment and record the market value.

Learn more on HMRC’s guidance: Gifts of equipment to charity

4. Seconding Employees

You can temporarily second (lend) an employee to work with a charity. Your company will still pay their wages and then deduct the associated cost as a business expense.

The employee continues to accrue pension, holiday and other entitlements.

This is a popular option for CSR programmes and professional services firms offering pro bono work.

5. Donating Land, Property, or Shares

Gifting land, property, or quoted shares to a charity also qualifies for Corporation Tax relief. You must:

• Transfer the legal title
• Get a certificate from the charity acknowledging the donation
• Keep detailed records for tax purposes

Gifts must be irrevocable and given to registered charities.