Charitable donations: where to enter them and how the Corporation Tax relief works

How to enter charitable donations

For a £1,000 qualifying donation included in £5,000 of Other charges:

1. Open step 2 of the wizard and the Profit and loss section.
2. Enter 4000 in Other charges, excluding the donation.
3. Enter 1000 in Charitable donations. Leave this field blank if none.
4. Check your summary. The accounts include £5,000 in Other charges. The tax computation adds the donation back before calculating the available donation relief.

Do not enter the donation again as a disallowable expense or in property expenses. For prior-year donations, use the donation row's prior-year cell and exclude the amount from prior-year Other charges. These are accounts comparatives only and do not affect this year's tax. If a prefilled Other charges figure includes donations, split the total without duplicating it.

If your company lets property

Use the same Charitable donations row, whether the company trades, lets property or does both. Exclude the donation from both trading and property Other charges. If your draft uses a net property income figure, exclude the donation from that figure too. We include the donation in the accounts and claim relief against total profits, rather than treating it as a property running cost.

Enter donations paid during the accounting period, not promises to pay later. If your tax period needs two returns, use the allocation panel below the donation to assign payments to the return covering their payment dates. The relief limit applies to each return separately.

What counts as a qualifying charitable donation?

Our Charitable donations field supports money your company paid to a charity on one of the UK charity registers, which are the Charity Commission for England and Wales, OSCR in Scotland and the Charity Commission for Northern Ireland. It also supports payments to a registered community amateur sports club (CASC). To qualify, neither the company nor anyone connected to it should have received anything in return beyond HMRC's small-benefit limits. That includes one-off gifts and regular monthly giving added up for the year. HMRC explains the rules in tax when your limited company gives to charity.

The rules can also cover a charity that HMRC recognises for tax purposes even when it is exempt or excepted from a public register. We trust your figures and file the relief you claim, so use the conditions on this page and the GOV.UK guidance to check that a payment qualifies before you enter it. Contact support if you are unsure.

Do not include:

• Sponsorship or a payment involving a benefit. Advertising, use of the charity's logo or another business-related benefit can make the payment sponsorship, which may qualify as a normal business expense instead. Tickets and other benefits can fall within separate statutory value limits. Our field does not decide between those cases, so contact support before claiming if the company or anyone connected to it received anything beyond HMRC's small-benefit limits.
• Gifts of goods, equipment, shares or land. These are relieved in a different way and we cannot claim them for you yet. Contact support.
• Payments to recipients outside our registered-charity and CASC scope. Some exempt or excepted charities can still be recognised by HMRC for tax purposes, so contact support rather than assuming the payment gets no relief. If the recipient has no qualifying charity or CASC status, the payment belongs in the Disallowable expenses field.
• Personal Gift Aid declarations. Company donations are sometimes called corporate Gift Aid, but the company does not use an individual Gift Aid declaration. It pays the donation gross and claims relief through its Corporation Tax return instead, which is exactly what this article covers.

We cannot check charity status or benefits for you. We trust the figures you enter and file the relief you claim, so before you enter a donation, check that it was a cash gift to a UK registered charity or CASC and that neither the company nor anyone connected to it received anything in return beyond HMRC's small-benefit limits. Each condition decides whether the deduction is due.

What it does on your return: box 305

A charitable donation is not a trading expense for Corporation Tax. The law (section 1301B of the Corporation Tax Act 2009) blocks it as a deduction when working out the company's income and instead gives relief as a deduction from your total profits (section 189 of the Corporation Tax Act 2010). On the CT600 that looks like this:

• Box 300 shows your profits before donations.
• Box 305 shows the qualifying charitable donation being deducted.
• Box 315 shows your profits chargeable to Corporation Tax after the deduction.

A worked example. Your company has £21,000 of trading profit after the £1,000 donation sat in its expenses. We add the £1,000 back, so box 300 shows £22,000, box 305 shows the £1,000 donation, and box 315 shows £21,000 chargeable to tax. If the company qualifies for the 19% small profits rate, the donation saves £190 of Corporation Tax. The tax computation we file alongside the return shows both steps transparently, the add-back and the deduction, so HMRC can see exactly what happened.

Donations larger than your profits: the cap

The relief can reduce your taxable profits to nil but never below nil. If your company donated £5,000 in a year when its profits before donations were £3,000, only £3,000 of relief is used and box 315 shows nil. The unused £2,000 is simply lost. It does not create a loss, it does not carry forward to next year and it cannot be carried back. We show you the used and unused amounts on your results screen so a wasted amount is never silent.

If your company made a loss before donations, the donation gets no relief that year at all, and your loss is unchanged. That is deliberate in the law: a wasted donation must not quietly become a carried-forward loss, because losses never expire and the relief does.

A donation can lower your tax rate, not just your profits

Which Corporation Tax rate you pay depends on your augmented profits, and those are measured after the donation is deducted. A donation can therefore move your company from the main rate into marginal relief, or from marginal relief into the 19% small profits band. For example, assume an eligible company has a 12-month accounting period, no associated companies and no relevant exempt distributions. If it has £51,000 of profits and donates £1,500, it has £49,500 of chargeable profits and pays the small profits rate on all of them. We calculate this automatically, so the band is always worked out from the post-donation figure the law specifies.

Why we add the donation back first

You might see other software, or general guidance, suggest simply entering a donation as a deduction in box 305 with no other adjustment. If the donation is already sitting in your expense figures, that claims the relief twice: once inside your trading profit and again in box 305. In a profitable year that understates your tax, and in a loss year it manufactures a carried-forward loss out of relief the law says is wasted. HMRC can charge interest and penalties when an error like that is corrected later.

That is why we use the two-place rule. Your accounts keep the true cost, the computation adds the payment back to trading profit, and the relief is then claimed once, in the right box, capped at your profits. You get every pound of relief you are entitled to and not a pound more, and your accounts never have to be distorted to make the tax work.

What we cannot claim for you yet

• An accounting period longer than 12 months. A long period files two Corporation Tax returns, and the relief belongs to the return covering the date each donation was paid. Directly under the Charitable donations field you will see both returns with their dates and a box for each. We start with the whole donation in the first return. If any of it was paid after the first return ends, move that part to the second return, then confirm. If you give regularly, add up the payments whose dates fall inside each return. Each return can only relieve up to its own profits, so a donation placed in a short second return with little profit may go partly unrelieved, and we warn you when that happens.
• Gifts of goods, shares or land, and donations with benefits in return, as above.

In each case the pause is deliberate. Filing without the relief would mean overpaying tax, and filing with a wrongly calculated claim is worse, so we tell you honestly instead.

Already filed without claiming a donation?

If you filed a return and the donation was never claimed, the return can be corrected within HMRC’s amendment window. File an amendment and include the donation this time.

This article is general guidance, not tax advice. Whether a payment is a donation or sponsorship, and whether a recipient is a registered charity, can involve judgement. If you are unsure, check GOV.UK or speak to an accountant.