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Post Info TOPIC: Charitable Donation
Wella


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Charitable Donation
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My turn to ask a question (again)

I have a client, who, out of the goodness of their heart donated a small amount of money from the business to a local hospice.

Can this be expensed, or will I have to enter it as drawings?

Looking forward to the replies

Bill



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RobH


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Hi Bill, that's fine and will be allowable against tax. If it has been donated via gift aid it of course attract the grossed up donation.

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Shamus


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Hi Bill,

my understanding is that donations to local charities are legitimate business expenses but donations to national charities are not.

The revenues reasoning behind this is that donating to local good causes generates local goodwill whereas donations to larger organisations does not. In this instance it looks to be allowable.

I've not got any generous clients myself but I believe that the tax treatment for charitable donations is to extend the basic rate tax band by the gross amount of the donation.

So, if you're client is a higher rate tax payer and donates £300 privately. Then gross up and add to the basic rate band.

£37,400 + (£300 * 100 / 80) = £37,775.

If it's a gift from a company then deduct the gross amount of the payment in the corporation tax computation.

Hope that I've got the above correct but if not I'm sure someone will soon put me right.... Must get myself some generous clients so that I know from experience the answers to one's like this!

talk later Bill,

Cheers,

Shaun.

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Shaun

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Ann-marie


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With regard to the donation I think it can only be Gift Aided if it's from an individual not a company - I'm not sure what kind of client you are dealing with but something just to bear in mind.

Ann-marie

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RobH


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Hi Shaun, that's right. If it is an individual making a gift aid donation, they too can claim the difference between basic and higher rate tax on the tax return.

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Wella


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Thanks all, as usual a great help

It's a small soletrader.

It wasn't that much of a generous donation but every little helps

Bill

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Rhianrach


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Do you have to have proof of the donation?

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Steve
Wella


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Good question

In my case they have a receipt.



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Rhianrach


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Cool, when reading up I assumed that any money given for no services recieved was a bit of a nightmare when it came to proving that in effect you really have just given the money away, whether it be a gift or in your case a donation. I suppose it's one area that is open to abuse smile


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