Tax relief on donations to Ukraine

Recent events in Ukraine have understandably resulted in an upsurge of donations for the assistance of those affected by the conflict. There is a widespread consensus that the most efficient method for individuals or organisations in the UK to assist is by way of the donation of cash to organisations which are delivering aid to those affected.

The best-known of these organisations is the DEC Humanitarian Appeal but there are of course many other organisations working in this area.

Tax relief on cash donations to the DEC or to other organisations involved in providing aid is available to individuals and companies (or other entities subject to the corporation tax regime) as follows:

Donations by individuals

• If a UK taxpayer donates to a charity which is registered for gift aid, the charity can claim an additional 25% of the amount of the donation from HMRC, provided that the donor has confirmed to the charity that the donation qualifies for gift aid. The donor usually does this either by completing a form for the charity or by ticking a “gift aid” box when making an online donation. Gift aid enables the charity to reclaim the income tax which the donor has suffered on the amount of the donation and this augments the amount available for the charity to distribute.
• If the donor is liable to income tax at the higher rate, they can obtain additional relief on the difference between the basic rate tax (which will have been reclaimed by the charity) and the higher rate. This is done by way of their self assessment return.

Donations by companies

• A donation by a company or other organisation subject to the corporation tax regime to a recognised charity is an allowable deduction for tax and should be treated as such when the corporation tax computation and return are completed.

Important conditions

It is important to note that these reliefs are only available for donations to organisations which are recognised as charities by HMRC.  This will include all UK charities which are registered for gift aid. Many other charities, including some non-UK charities, will also fall within the scope of this relief as long as they are recognised as charities by HMRC.

Tax relief is not available for donations made to organisations which are not recognised as charities by HMRC.  So, for example:

• If a local Church is collecting donations which will be passed on to other organisations providing aid to those affected by the conflict, donations to the Church collection are likely to be eligible as most Churches are registered for gift aid
• If a collection is being organised by a company or a community organisation which is not a recognised charity, donations will not be eligible.

Photo by Yehor Milohrodskyi on Unsplash