Charity Donations for Partnership

poms2017

Hi all....

Hope one of you experts can help clear something up for me.

As a partnership if we donate 10% of the total partnership income to charity can we claim tax relief on it.

From what I have read we have to declare the donation as drawings rather than direct expenses, which mean we pay the tax on it.

So are we out of pocket or can we claim it back - it's all a little confusing with the Gift Aid system etc.

Maybe we have to consider donating 10% less the tax we pay to cover ourselves.

Any advise and or help would be very much appreciated.

TIA

MichelleUK

The gift-aid donation is not shown on the partnership return at all, you must show the profit of the partnership before the donation.

Each partner can show their share of the donation on their personal tax return. No tax relief is given to the partner if the partner is only a basic rate tax payer (as they have also donated this to the charity). If the partner is a higher rate payer, they will get relief for how much extra tax, beyond the basic that they have paid to the charity, that they have paid.

An example:

A two partner partnership that shares profits 50/50.

A partnership makes a profit of £9,000 after having made a £1,000 gift aid payment.

The profit shown on the partnership tax return is £10,000. The two partners can put £500 of gift-aid donations on their personal tax returns.

Pennywise

Partnerships don't pay tax. The partners pay tax personally on their share of profits. Because the partnership doesn't pay tax, it can't claim gift aid.

poms2017

Thanks for your responses much appreciated.

Am I right in understanding that if the partners both donate a sum of money to the charity, then this amount is deducted from their total earnings, and tax is due on the remainder (after deducting the donation). ie: as if they had not earnt the money in the first place.

sheramber

No. The payment comes out of his taxed earnings. he cannot deduct it from his earnings before payng tax.

If the partner completes a gift aid document then the charity can claim the basic rate tax that he paid on that money. If he is higher rate tax payer he can claim relief on the extra above basic rate tax paid.

If he does not pay tax at basic rate to cover the amount the charity reclaim he will be charged for the amount.

poms2017

Thank you all for your replies, very helpful and much appreciated.