Charitable Giving: What to Tell Your Accountant & How to Record It

Many of our clients generously support charities, but to ensure you receive the correct tax relief - and to ensure your accounts and returns are accurate - we must know exactly how you made your donations.

Whether you're self-employed or run a limited company, this guide will explain:

• The best way to give to charity (for tax efficiency)

• How to record it in FreeAgent or other software

• What to do if you don’t use bookkeeping software

1. If You Give Through Your Limited Company

Donations made directly from your company can be treated as allowable business expenses for Corporation Tax purposes, provided they meet HMRC rules.

✅ What we need from you:

• Date of donation

• Amount given

• Name of the charity

• Type of gift (cash, goods, land, property, shares)

• Confirmation it was a company donation (not personal)

📘 How to record this in FreeAgent:

1. Go to “Banking” > “Bank Transactions”

2. Find or create the transaction for the donation

3. Explain the transaction as:

   • Category: “Charitable Donations”

   • Type: Payment

4. Add a description, e.g., “Donation to Cancer Research UK”

⚠️ Do NOT tick Gift Aid for company donations – Gift Aid is only for personal donations.

2. If You Give Personally (Self-Employed or Salaried)

Most individuals give personally and tick the Gift Aid box. This lets the charity claim 25p from HMRC for every £1 you donate. If you’re a higher-rate taxpayer, you can claim additional relief through your Self-Assessment.

✅ What we need from you:

• Dates and amounts of each Gift Aid donation

• Name of the charity (optional but helpful)

• Whether it was a one-off or regular donation

🧾 How to record personal donations in FreeAgent:

For sole traders:

1. Go to “Banking” > “Bank Transactions”

2. Find the relevant payment

3. Explain the transaction as:

   • Category: “Drawings”

   • Add a note, e.g., “Gift Aid donation to British Red Cross”

This ensures the donation is treated as personal and not a business cost.

📌 You’ll still need to give us a list of Gift Aid donations when we complete your tax return so we can include them correctly for relief.

3. Payroll Giving (for Employees and Directors)

Donations made through your payslip via a payroll giving scheme are deducted from your gross pay, providing immediate tax relief.

✅ What we need:

• Monthly amount donated

• Name of the charity (optional)

• Total donated during the year

4. Gifts in a Will

If you’ve left a gift to charity in your will:

• Let us know so we can help with future estate planning

• These gifts may reduce Inheritance Tax or the rate paid

5. Donating Land, Property or Shares

This offers income tax and/or capital gains tax relief.

✅ Please provide:

• Description and value of the gift

• Date given

• Name of the charity

• Whether it was sold below market value or fully gifted

Don't Use Software? Fill Out Our Self-Assessment Form

If you don’t use FreeAgent or similar bookkeeping tools, no problem. We include a dedicated question in our Self Assessment checklist asking for:

• Dates and amounts of all donations

• Whether you claimed Gift Aid

• Any non-cash donations or gifts in wills

Please complete this section carefully so we can claim all available relief on your behalf.