Tax relief for charitable donations

The Perrys Triathlon was a fundraising event for our chosen charity, The Kent Cancer Trust, where we entered several individual and relay teams at the London Triathlon on Saturday 8 August 2015. There are various other articles and blogs in relation to the event and a summary of the total fundraising to date is below.

Whilst most individuals and businesses make charitable donations as a financial contribution to a charity or fundraising event that they support, the taxation status of the charity and the donors will usually mean that there is a considerable saving for the charity compared to the actual donation made.

Donations by Individuals

Where a UK tax payer makes a charitable donation to a UK registered charity, if the UK tax payer elects to have the donation classified under the "Gift Aid" scheme, then the charity can reclaim 25% of the donation from HMRC as tax reclaimed under the gift aid scheme.

In addition, the donor will receive tax relief on the donation. For basic rate tax payers, this is neutral but for higher or additional rate tax payers, an additional amount of tax relief is obtained when the individual prepares and submits their self assessment tax return.

Company Donations

Generally, qualifying charitable donations will obtain corporation tax relief if some very basic conditions are met. In summary, if a UK company makes a donation to a registered UK charity, and there is no direct benefit to the donor, then a corporation tax deduction will be available.

Company donations do not qualify for the gift aid scheme but the charity still benefits from the donation at a higher rate of the net cost to the company.

The table below indicates how the charity receives more than the net cost of the donation – either by individuals under Gift Aid or by company donations.

Individual donations (& gift aid):

Based on a donation of £120

Company donations:

As long as the charity is a UK registered charity, and is only involved in charitable activities, then a straightforward application to HMRC that the charity will be exempt from tax is normally a straightforward process. If a charity undertakes trading activities, then these will normally be subject to UK tax.

The Perrys Triathlon/Kent Cancer Trust

As of today's date (Monday 17 August), the fundraising is as follows:

  • Cash donations via the fundraising page: £5,190
  • Total raised including gift aid – £5,803.75
  • Offline fundraising – £550

The fundraising page is still open and any further donations will be greatly appreciated.

The various links are as follows:

Donation page – www.virginmoneygiving.com/team/perrystriathlon

The Kent Cancer Trust – www.kentcancertrust.org.uk

The London Triathlon – www.thelondontriathlon.com

If you have any further questions on charitable donations, gift aid or any other matter, please contact your local Perrys office.