Qualifying charitable donations and excess management expenses
Qualifying charitable donations and excess management expenses

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Qualifying charitable donations and excess management expenses
  • Relief for qualifying charitable donations
  • Excess management expenses

All companies within the charge to corporation tax can deduct qualifying charitable donations from their total profits, after all other deductions have been made (other than group relief and group relief for carried-forward losses) to reduce total profits to zero. Excess qualifying charitable donations are lost, unless the company is a company with investment business.

Companies with investment business can deduct their management expenses from their total profits. The deduction must be made before any other deductions from total profits.

Excess management expenses can be carried forward to the next accounting period and deducted from total profits of that period or, in the case of losses arising on or after 1 April 2017, surrendered for group relief. Companies with investment business that have excess qualifying charitable donations can carry those excess charitable donations forward as management expenses but cannot surrender them for group relief for carried-forward losses.

Relief for qualifying charitable donations

If a company makes a qualifying charitable donation (a QCD) in an accounting period, it can deduct that QCD from its total profits. Such a deduction reduces taxable total profits and therefore the amount of corporation tax the company will pay. For further information on total profits, taxable total profits and calculation of corporation tax, see Practice Note: Basis of calculation of corporation tax.

The deduction of QCDs from total profits