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Supporting the New Forest Trust
Tax Benefits for Companies
Managing a company's budget and its charitable giving
More and more companies, of whatever size, are receiving requests for donations from all sorts of charities. Whilst a company may have a budget for its charitable donations, the time spent in considering the requests can be great and often the job is carried out by someone who already has too much to do and too little time in which to do it. Setting up a Named Fund with the New Forest Trust ensures that local causes are supported, reduces the administrative time spent by the company and also ensures recognition for the company of the donations being made.
Donations by limited companies
From 1st April 2000 donations are no longer eligible for Gift Aid but must be paid to the New Forest Trust gross. The amount of the donation can, however, be offset against Corporation Tax so long as it is included in the company's tax return.
For example, (assuming your company pays Corporation Tax at the full rate of 30%) the company is now required, in order to make an effective donation of £10,000 to the New Forest Trust to actually pay £14,300 and then to reclaim from the Revenue £4,300 by means of relief against Corporation Tax.
Payroll giving
The upper limit of £1,200 pa has now been abolished so that an unlimited amount can be contributed via payroll giving. In addition, the Government will now supplement all donations made by an additional 10%.
An announcement is still awaited on the Government's stated intention of introducing incentives to companies to put in place a payroll giving scheme.
Gifts of Shares
A gift of qualifying shares to the New Forest Trust is not subject to corporation tax and the value of those shares can be claimed as a deduction against the profit chargeable to corporation tax of the company.
While the savings are substantial, they are not as great as for individuals because the full corporation tax rate is only 30% as compared to the top income tax rate of 40%.
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EXAMPLE
Your company owns quoted shares worth £500,000 which cost £25,000
Either your company could sell and pay up to £190,000 capital gains tax
or
You could donate the shares to the New Forest Trust and your company would then receive a corporation tax deduction of up to £150,000 (30% of the value).
RESULT
Your company donated £500,000 to the New Forest Trust and it has cost only £160,000 (the shares given away were worth £310,000 after Capital Gains Tax liability offset by the £150,000 received by way of reduction in corporation tax.
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If you would like more information about tax implications the Inland Revenue has produced a booklet about giving to charity:
- IR64 Giving to charity by business
- IR65 Giving shares and securities to charity
You can contact them by telephone on 0845 9000 404
email saorderline.ir@gtnet.gov.uk or visit their site http://www.inlandrevenue.gov.uk/
Or you can contact the Trustees who will be happy to provide more information.
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