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Company donations to charity: how the tax relief works

Reviewed by Lee Jones, Founder · Updated 17 July 2026
The short answer

When your company gives money to charity, the donation comes off your profit before Corporation Tax is worked out, so the company pays tax on the smaller number. One hard limit: a donation can shrink your profit all the way to nil, but it can never turn a profit into a loss.

Official source. This guide is a plain-English summary of official GOV.UK guidance, not advice. The authoritative source is Tax when your limited company gives to charity on gov.uk. Always rely on that over our summary.

How does the relief actually work?

Simply. Your company works out its profit for the year, takes the donation off, and pays Corporation Tax on what is left.

Say your company made £30,000 profit and gave £2,000 to charity during the year. The donation comes off first, so the company is taxed on £28,000. At the 19% rate most small companies pay, that £2,000 donation cuts the tax bill by £380. Giving is never free, the full £2,000 still left the company, but the taxman shares some of the cost.

Money given to a registered community amateur sports club gets the same treatment.

Can a donation push my company into a loss?

No, and this is the rule that catches people out. The most a donation can do is take your profit down to zero. It cannot turn a profit into a loss, you cannot claim a loss because of it, and you cannot carry the spare amount forward to next year's return.

Say your company made £3,000 profit and generously gave £5,000 to charity. Relief stops at £3,000: profit goes to nil and so does the tax bill. But the other £2,000 of the donation earns no tax relief at all, this year or any year. The charity still gets the full £5,000. The tax system just stops helping once your profit hits the floor.

Which payments do not count as donations?

A few things look like donations but do not qualify:

  • A loan the charity will pay back. That is a loan, not a gift.
  • A payment with strings attached, made on the condition the charity buys property from your company or anyone connected with it.
  • Dividends or any other share of the profits. Those come out after tax, so they were never a donation.
  • A donation where you get too much back. Small thank-yous are fine, within limits: on a donation up to £100 any benefit must be worth no more than a quarter of it, from £101 to £1,000 the cap is £25, and above that it is 5% of the donation, capped at £2,500. The limits cover perks given to anyone connected with your company, close family included.

What about giving things instead of money?

Money is the simple case, but the relief covers other kinds of giving too:

  • Equipment your company has used, like computers, office furniture, vans or tools: you can claim the full cost through the usual equipment relief.
  • Stock, meaning items your company makes or sells: donate them and nothing is added to your sales income for the gift, so you get relief on what the stock cost you.
  • Land, property or shares in another company: give them (or sell them cheap to the charity) and there is no tax on the gain, and the market value comes off your profit. Shares in your own company do not qualify, and the paperwork must be kept for at least six years.
  • Lending a member of staff to a charity, or letting them volunteer in work time: their wages stay a normal business cost, as if they were still working for you.

Is sponsorship the same as a donation?

No. Sponsorship means your company gets something back for the business: the charity publicly supports your products, puts your logo in their printed material, lets you sell at their event, or links from their website to yours. Payments like that count as a normal business expense rather than a donation, and still reduce your profit before tax. If you are unsure which side a payment falls on, HMRC has a charities helpline you can ask.

Common questions

We gave £500 and got free tickets to the charity ball. Still a donation?

Only if the tickets were worth £25 or less, because that is the benefit cap for donations between £101 and £1,000. Worth more than that and the payment stops qualifying as a donation.

Our donation was bigger than our profit. Do we get a refund?

No. The relief stops when your profit reaches zero: no loss to claim, no carry-forward of the spare amount.

Where does the donation go on the tax return?

In a specific reliefs box on the Company Tax Return for the year you gave. If you file with us you never need to find that box yourself.

Giving to charity? We handle the tax side

Categorise the payment as a charity donation and SimpleReturns applies the rules for you: the donation comes off your profit automatically, the profits-to-zero floor is applied exactly as HMRC requires, and the figure lands in the right box on your return. You see every number before anything is sent. Free to start, £99 flat for both filings.

Start your return

And if your company gives land, shares or seconded staff, those routes have their own paperwork and an accountant's eye is a sensible extra check.

General guidance, not advice. This guide explains how the rules generally work for small UK limited companies. It isn't tax advice for your specific situation, if you're unsure, check with us or an accountant.