Finance Act 1986

29 Donations by companies to charities etc.

(1) On a claim made by a company which is resident in the United Kingdom and is not a close company, a qualifying donation made by the company shall, subject to the provisions of this section, constitute a charge on the income of the company for the purposes of section 248 of the Taxes Act.

(2) Subject to subsection (3) below, a qualifying donation is a payment made by the company to a charity, other than—

(a) a covenanted payment to charity, as defined in section 434(2) of the Taxes Act; and

(b) a payment which is deductible in computing profits or any description of profits for purposes of corporation tax.

(3) A payment made by a company is not a qualifying donation unless, on the making of it, the company deducts out of it a sum representing the amount of income tax thereon; and in section 55(1) of the Taxes Act (certificates of deduction) after the words "Finance Act 1973" there shall be inserted "or section 29 of the Finance Act 1986".

(4) Where, with a view to securing relief under this section, a company makes a payment subject to such a deduction as is mentioned in subsection (3) above, then, whether or not it proves to be a qualifying donation, the payment—

(a) shall be treated as a "relevant payment" for the purposes of Schedule 20 to the [1972 c. 41.] Finance Act 1972 (collection of income tax on company payments which are not distributions); and

(b) shall in the hands of the recipient (whether a charity or not) be treated for the purposes of the Taxes Act as if it were an annual payment.

(5) In any accounting period of a company, the maximum amount allowable under section 248 of the Taxes Act in accordance with subsection (1) above in respect of qualifying donations made by the company shall be a sum equal to 3 per cent, of the dividends paid on the company's ordinary share capital in that accounting period.

(6) In this section "charity" includes—

(a) the Trustees of the British Museum;

(b) the Trustees of the British Museum (Natural History);

(c) the Trustees of the National Heritage Memorial Fund;

(d) the Historic Buildings and Monuments Commission for England; and

(e) any Association of a description specified in section 362 of the Taxes Act (scientific research associations);

and, subject to paragraphs (a) to (e) above, "charity" has the same meaning as in section 360 of the Taxes Act.

(7) This section applies to payments made on or after 1st April 1986 and, in the case of a company whose accounting period begins before and ends on or after that date, the period beginning on that date and ending at the end of that accounting period shall be deemed to be an accounting period for the purpose of applying the limit in subsection (5) above.