Charitable donations are not deductible against trading profits as they are not incurred wholly and exclusively for the purposes of the trade. CTA 2009 s54. However, donations to registered charities are deductible against total profits as qualifying charitable donations. CTA 2010 s189.
The definition of charity for this purpose is found in FA 2010 Sch 6 Para 1. For a body to meet the definition of a charity, the body must meet the jurisdiction condition. This means that the body has to be subject to either the courts of England and Wales, Scotland or Northern Ireland in relation to charity law. Prior to 15 March 2023, this definition also included charities subject to the courts of either the EU, Iceland or Norway. FA 2010 Sch 6 Para 2 This means that donations to charities based in these countries would qualify for corporation tax relief as a qualifying charitable donation provided the other conditions for relief are met. CTA 2010 s191
The jurisdiction condition has changed from 15 March 2023 subject to transitional rules set out in Finance (No2) Act 2023 s344. Whether tax relief will be available for companies making donations to charity in the EU, Iceland or Norway is dependent on whether the charity has asserted charitable status with HRMC before 15 March 2023. HMRC have confirmed in their policy paper published on 15 March 2023 that approximately 20 EU charities have asserted their charitable status so the transitional provisions will not affect donors to the majority of charities.
This means that if the charity has not asserted its charitable status by the above date, charitable donations made in accounting periods beginning after 15 March 2023 will not be eligible for corporation tax relief. F(No2)A 2023 s344(4)(c). If the charity has asserted its status, the new jurisdiction condition will take effect for accounting periods beginning on or after 1 April 2024. F(No2)A 2023 s344(2)(c).
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