The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
A payment made by a company which is qualifying expenditure on grassroots sport is allowed as a corporation tax deduction, subject to certain conditions. This legislation was introduced by F(No 2)A 2017, s 22 and applies to payments made on or after 1 April 2017. Without this specific legislation, a deduction would not otherwise be available on the basis that such a payment would not usually be made wholly and exclusively for the purposes of the trade.
The relief is given by way of a deduction from taxable total profits. It is not possible to create a loss by utilising this relief so spreadsheets used in tax calculations must be appropriately formulated to ensure total profits cannot be reduced below zero.
Full relief is given for qualifying payments made by or to a qualifying sports body (QSB). The QSB test for company donors is applied at the time of payment. Relief for ‘direct payments’ (ie non-QSB payments) is restricted to a maximum of £2,500 which is reduced proportionately for short accounting periods. Where an accounting period straddles 1 April 2017, then a notional accounting period for the purposes of the maximum relief begins on 1 April 2017.
There are several definitions that apply for the purposes of relief for expenditure on grassroots sport as set out in the table below:
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