Commentary

B2.441 Gifts—benevolent gifts, cash payments and gifts of medical supplies

Business tax
Business tax | Commentary

B2.441 Gifts—benevolent gifts, cash payments and gifts of medical supplies

Business tax | Commentary

B2.441 Gifts—benevolent gifts, cash payments and gifts of medical supplies

Benevolent gifts by traders

In general, the cost of business entertainment and gifts is not an admissible deduction for tax purposes1 (see B2.432). However, this restriction is removed2 in the case of business donations to registered charities, provided the deduction would otherwise be allowable. Other expenditure on gifts does not fall within the restriction provided that:

  1.  

    •     it is wholly and exclusively incurred for the purposes of the trade

  2.  

    •     the gift is made for the benefit of a body or association of persons established for educational, cultural, religious, recreational or benevolent purposes, and the body or association is:

    1.  

      –     local in relation to the donor's business activities and

    2.  

      –     not restricted to persons connected with the donor

  3.  

    •     the expenditure is reasonably small in relation to the scale of the donor's business.

The payment of an ordinary annual subscription to a local trade association by a non-member is similarly not regarded as a gift provided it is incurred wholly and exclusively for the purposes of the trade3.

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