Why is Corporate Social Responsibility important to your business?

Why is Corporate Social Responsibility important to your business?

The awareness of Corporate Social Responsibility (CSR) and the impact it has on business is on the rise. This is good news for local communities, especially with recent Government funding cuts, but how can you manage your charitable giving so that it doesn’t have a negative impact on the figures?

If you are in an industry that often finds itself targeted for donations, it is important to get this policy right, ensuring you take the appropriate time in ensuring your resources are spent wisely.  The policy should be clear and concise and easily accessible to your colleagues.

Making charitable donations can benefit you, or your business, by reducing tax liabilities.

Your limited company pays less Corporation Tax when it gives the following to charity:

• money
• equipment or trading stock (items it makes or sells)
• land, property or shares in another company (shares in your own company don’t qualify)
• employees (on secondment)
• sponsorship payments

You can claim tax relief by deducting the value of your donations from your total business profits before you pay tax.

Individuals / Sole traders / Partnerships

Donations by individuals to charity or to community amateur sports clubs (CASCs) are tax free. This is called tax relief.  The tax goes to you or the charity. How this works depends on whether you donate:

• through Gift Aid
• straight from your wages or pension through a Payroll Giving scheme
• land, property or shares
• in your will

This also applies to sole traders and partnerships.

You will need to keep records of donations if you want to claim tax back on them.  If you’re claiming tax back through your Self-Assessment tax return or by asking HM Revenue & Customs (HMRC) to amend your tax code keep records showing the date, the amount and which charities you’ve donated to.

For donations of land, property or shares you are required to keep legal documents showing the sale or transfer to charity and any documentation from the charity asking you to sell land or shares on its behalf

You normally have to keep your records for at least 22 months from the end of the tax year they’re for.

For more information and specialist advice, please contact Avanti