Other giving by businesses

Businesses can get tax relief on gifts of trading stock: items manufactured or sold in the course of trade. When companies give away an article they usually include the market value of the gift as a trading receipt when calculating profits for tax purposes. Where such articles are given to a charity nothing is included as a trading receipt. In this way, they get relief for the cost of the article in calculating the taxable profits of the trade.

In the case of gifts of machinery or plant used in the course of trade they can claim capital allowances by treating the gift as having been disposed of at nil value for capital allowances purposes (rather than at market value as would otherwise be the case). The total capital allowances given in respect of the article will be equal to its cost.

There is a relief for business from corporation tax for gifts of medical supplies and equipment made for humanitarian purposes. This operates by giving a deduction from trading profits where they would not otherwise be allowable as wholly and exclusively for the purposes of the company’s trade. A deduction is also allowed for any costs of transportation, delivery or distribution incurred by the company in making the gift.

For more information on how to benefit from this tax relief, see HMRC’s guidance online.

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