Charitable Company

[gringo8363]

Hello everyone.

I have a small trading company (Ltd) of which I am sole director and shareholder, and I want to use 10% of the company profits for charitable purposes. To be exact I want to use the money to help orphanages in India, however I don't want to just make donations to organised charities and have them swallowed up in admin costs, I want to donate the funds and/or equipment directly to the orphanages themselves.

My question is, how can I achieve this without paying tax on the money that I donate i.e. how do I get a CT deduction?

Someone told me I could register my existing company as a charity even if I only donated a small percentage of the profits, is this true and how would it work?

Could I set up a second company as a charity or otherwise, and transfer funds through that?

I am completely genuine and don't want to do anything dubious I just want to maximise the money going to charity.

Thanks for your help.

[pjclar02]

Hello

I am by no means a charities expert, but as nobody has answered your post yet I will share my thoughts.

I don't believe you will be able to register your existing company as a charity. As the purpose of the company is primarily that of making a profit through your trade, I don't think the Charity Commission would ever grant charity status.

I think you would have to register a second company, limited by guarantee, and register this second company with the Charity Commission. Your trading company could then make donations to the new company and claim corporation tax relief on the donation.

My experieces of clients trying to register with the Charity COmmision is that this is a long game - so I wouldn't expect an immediate solution and you may need the input of a Charities expert.

Hope this is of some, albeit limited, help.

Best wishes

Paul
pjclar02@yahoo.com

[gringo8363]

Thanks for that, so do you believe I would get CT relief on the donations even though they are not for a local charity?

I will of course seek assistance from an expert in setting up the charity, I just wanted to clarify whether it could be done from a tax point of view.

[pjclar02]

Hello

Yes - if you are registering a UK charity, then the donations will qualify as a payment to charity, and will be deductible from your profits chargeable to tax, even though the ultimate beneciaries of the support provided by the charity are not local.

Note, however, that the donations will be deductible as a "charge on income", and will not be deducted directly from your trading profits. This may or may not be an issue depending upon the profitability of your company and will only be relevant where the company becomes loss-making.

I hope this is helpful.

Best wishes

Paul