Tax and charitable donantions

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ryanline79

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Hopefully this is ok to post & makes sense. Our business (sole trader) deals regularly with a charity that has charitable status. We have always given them a percentage discount each month on their bill.

I was wondering if we would be better off from a taxation perspective if we charged them fully and then made a donation once their discount is over the threshold? Would that make more sense? Or does anyone have any other suggestions how to work this better as we would like to be able to give them more of a discount / donation.

Thanks
 
I don't really understand your question. If you want to charge them less, just reduce your price to them.

If you make a donation to them, you can't claim tax relief on it. The charity may be able to do so though once its over a certain limit.
 
No the charity can claim back a tax element provided the donation is over a designated mount.
 
The relevant revenue page is: [broken link removed]

the linked CHY3 pdf of that page says:
"In the case of corporate donations, the company claims a deduction for the donation as if it were a trading expense or an expense of management; there is no grossing up arrangement in this case. Company X donates €1,000 to an approved body. Assuming a corporation tax rate of 12.5%, relief to the company is €125, i.e. €1,000 @ 12.5%. While the approved body has the benefit of €1,000, the cost to the company of making the donation is only €875 (€1,000 - €125). The company will simply claim a deduction for the donation as if it were a trading expense or an expense of management, there is no grossing up arrangement and therefore no repayment claim by the approved body arises"

INAL so I dont know if a sole trader counts as an individual or corporate, but maybe this is what OP is thinking of. I'd love to know the answer too!
 

Ya that's exactly what I thought.

I was wondering if anyone had been in a similar situation. I'm trying to figure out what is the most efficient way to work it.
 
ryanline79 said:
Do you not get tax relief on donations made to charitable organisations?
Click to expand...

For donations made before 1 January 2013, relief was granted to self-assessed individuals (including sole traders) by means of a deduction from income in the tax year in which the donation was made.

There is no tax relief for donations made after that date – only the charity can claim back the tax.

Companies can claim a deduction by treating the donation as a trading or management expense.
 
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Thanks Sophyrosyne - so there is no tax advantage to giving a donation by an individual or a sole trader then. However in our case where we are allowing a discount, I'm assuming that the charity would be better off if we gave it to them as an actual donation. In that they will be able to claim additional monies from revenue?
 
There's still no tax saving. The sole trader gets no tax deduction for the donation, as they would presumably have done for a discount given in the course of trade. The overall tax burden, all things being equal, should now be higher than previously.
 
No I'm aware now that there is no tax saving. As you say if we charge full price we will be liable to tax on the additional monies.

Thanks for all the advice.
 
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