SMEs and Charity Support
Awareness of Corporate Social Responsibility (CSR) and its link to business is on the rise. This means good things for local communities and projects especially in the light of Government funding cuts, but how can you manage your charitable giving, so that it doesn’t have a negative impact on the figures?
CSR is not solely about financial giving but even your time has a value, so you need to manage it responsibly and effectively.
If you are in an industry that often finds itself targeted for donations of varying size and value, it is important for you to get this policy right.
Take the time to write a CSR policy, this will help you to deal with requests for support, and ensure that your time/ resources are spent wisely. Make your employees aware of the policy, and make it available as a standard email / visible policy on your website. There is no harm in making your policy clear and concise and saves wasting the time of those requesting your support too.
It is worthwhile choosing a select number of charities or defining an area within a set radius of your business that you actively support.
Making charitable donations can benefit you/ your business/ Company by reducing tax liabilities –
Your limited company pays less Corporation Tax when it gives the following to charity:
• money
• equipment or trading stock (items it makes or sells)
• land, property or shares in another company (shares in your own company don’t qualify)
• employees (on secondment)
• sponsorship payments
You can claim tax relief by deducting the value of your donations from your total business profits before you pay tax.
Individuals / Sole traders / Partnerships
Donations by individuals to charity or to community amateur sports clubs (CASCs) are tax free. This is called tax relief.
The tax goes to you or the charity. How this works depends on whether you donate:
• through Gift Aid
• straight from your wages or pension through a Payroll Giving scheme
• land, property or shares
• in your will
This also applies to sole traders and partnerships.
If you want to donate to a sports club, check if it’s registered as a community amateur sports club (CASC). You can’t donate to a CASC through Payroll Giving.
Keeping records
You need to keep records of donations if you want to claim tax back on them.
If you’re claiming tax back through your Self Assessment tax return or by asking HM Revenue & Customs (HMRC) to amend your tax code keep records showing the date, the amount and which charities you’ve donated to.
For donations of land, property or shares you need to keep:
• legal documents showing the sale or transfer to charity
• any documents from a charity asking you to sell land or shares on its behalf
You normally have to keep your records for at least 22 months from the end of the tax year they’re for.