Corporation Tax Act 2010 section 472A

Gifts under payroll deduction schemes: corporation tax liability and exemption

Section 472A sets out how donations received by charitable companies through payroll giving schemes are treated for corporation tax purposes, including the charge to tax and the available exemption.

• Donations received by a charitable company from individuals through a payroll giving scheme are treated as income chargeable to corporation tax.
• If the donation is applied solely to charitable purposes, it is excluded from the calculation of total profits.
• The exemption from corporation tax is not automatic — the charitable company must make a formal claim.
• The effect is that payroll giving donations used for charitable purposes are ultimately free of corporation tax, provided the charity submits the required claim.