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Use the Qualifying charitable donations (QCDs) template to account for charitable donations that qualify for corporation tax relief under Chapter 2 of Part 6 of the Corporation Tax Act 2010 (CTA 2010). The template adds back any charitable donation charged in the accounts, tracks the amount actually paid in the period, and passes the qualifying amount through to be relieved against total profits.

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When should I use this template?

Use this template where the company has made qualifying charitable donations — most commonly cash gifts to charity — that it wants to relieve against its profits for corporation tax.

The template performs two jobs. First, it removes any charitable donation that has been charged in arriving at the accounting profit, because such donations are not an allowable trading (or property) expense. Second, it identifies the amount paid in the period, which is the amount that qualifies for relief against total profits.

Before you start

Make sure the UK Corporation Tax workflow has been added to the file and that a business type has been selected in the Business type section of the Return information template. If no business type is selected, the template shows a warning and cannot calculate.

For each donation you will need the amount charged in the accounts (the profit and loss / OCI charge) and the amount actually paid in the period, as relief is given on a paid basis rather than an accruals basis.

Background: how QCD relief works

Qualifying charitable donations are deducted from the company's total profits in calculating the corporation tax chargeable for the period (s189 CTA 2010). Three features of the relief shape how the template works:

  • Paid basis. Relief is given in the accounting period in which the donation is paid, not the period in which it is accrued or charged in the accounts.
  • Cannot create or increase a loss. The deduction is limited to the amount that reduces the company's taxable total profits to nil. It cannot create, or add to, a loss.
  • Excess is lost. Any qualifying donation that cannot be relieved in the period (because profits are insufficient) is not an allowable trading expense and generally cannot be carried forward — the excess is simply lost. (Different rules can apply within groups.)

Because a donation charged in the accounts reduces accounting profit but is not an allowable deduction in computing trading (or property) profit, the template adds the charge back to profit, and then relieves the amount paid separately against total profits.

Step 1: Add the template and check the business type

Add Qualifying charitable donations (QCDs) from the Corporation Tax workflow.

The template is business-type aware. Where a company has more than one business type, a separate donations table is shown for each. If no business type has been selected, follow the link in the warning to the Return information template to select one.

Step 2: Enter each donation

Add a row for each donation and complete the columns:

  • Description – a label for the donation.
  • Liability b/f – any amount charged in the accounts in a previous period but not yet paid, brought forward.
  • P&L / OCI (charge) / credit – the amount charged (or credited) in the accounts for the period. This is the figure that is added back to profit.
  • (Paid) in period – the amount actually paid in the period. This is the amount that qualifies for relief.
  • Other – any other movement in the liability (hidden unless used).
  • Liability c/f – calculated by Silverfin as the closing liability.

Silverfin shows a warning where a value has an unexpected sign — for example a negative brought-forward liability, a positive figure in the paid column (payments should be entered as negative), or a negative closing liability — so you can check the entry.

For a long period of account, the template shows a separate "(Paid) in period" column for each of the two accounting periods, so the amount paid is relieved in the correct period.

Step 3: Reconcile to the profit and loss / OCI analysis

The total charge entered in the template is reconciled against the charitable donations analysed in the profit and loss / OCI analysis. Where the two do not agree, Silverfin shows an unreconciled indicator with the total per the analysis, the total recalculated in the template, and the difference — so you can identify and resolve the discrepancy before finalising.

What flows through to the rest of Corporation Tax?

  • The P&L / OCI charge is added back to the income of the relevant business type as an adjustment to profit, because the donation is not an allowable expense in computing trading or property profit.
  • The amount paid in the period flows to the Qualifying donations relieved template, where it is deducted from total profits (subject to the cap that it cannot reduce profits below nil).

For an investment business, the template does not create an adjustment to profit (management-expenses treatment applies), but the amount paid is still passed through for relief.

What rolls forward next year?

Where a donation has been charged but not yet paid, the closing liability (Liability c/f) rolls forward to become next year's Liability b/f, so that the relief is picked up in the period in which it is eventually paid. Where the closing liability is nil, the row does not roll forward. Current-period charge and paid figures clear for the new year.

Frequently asked questions

Why is the donation being added back to profit?

A charitable donation is not an allowable expense in computing trading or property profit, so the amount charged in the accounts is added back. Relief is instead given against total profits on the amount paid.

Why is my relief less than the donation paid?

Relief for qualifying charitable donations cannot reduce taxable total profits below nil and cannot create or increase a loss. If profits are insufficient, the excess is not relieved and is generally lost.

Does the timing of payment matter?

Yes. Relief is given on a paid basis — in the accounting period the donation is paid. Amounts accrued but unpaid are carried forward as a liability until paid.

Why is there an unreconciled indicator on the total?

The template reconciles the charge you enter to the charitable donations in the profit and loss / OCI analysis. The indicator shows the total per analysis, the recalculated total, and the difference so you can resolve it.

Why do I see more than one table?

The template is business-type aware and shows a separate table per business type where the company has more than one.