The General Election is upon us and your clients may be asking whether they can donate funds or goods to a political party from their business.
There is nothing to prevent a business owner from making a political donation out of their business bank account, or from their personal bank account. There is no upper limit on the amount which can be given to any one political party, either in cash, as services or goods.
Amounts to political parties that don’t exceed £500 (£50 received by the candidate or their agent) are not technically “donations” under electoral law. However, the recipient Party should keep a running total of such receipts, in case the £500 threshold is breached by a series of donations in a short period.
Any donations with a value exceeding £500 can only be accepted from; individuals registered on the UK electoral roll, UK-registered companies or businesses, UK registered trade unions, certain trusts and building societies. Political parties can also receive public funds.
Donations exceeding £1,500 to a local Party branch, and donations exceeding £7,500 to the central Party, must be reported to the Electoral Commission, which publishes details of the donors and the amounts once a quarter. Unincorporated organisations which make political donations exceeding £25,000 in a year must register with the Electoral Commission.
Political parties are not charities, so there is no tax deduction for amounts given by individuals or businesses. The political gift must added-back as a disallowable item in the tax computation for the business. Where the donor is a company a gift to political party doesn’t create a taxable benefit in kind for the director or shareholders of that company.
A business may also donate goods, or the services of its staff, by seconding them to work for or on behalf of the political party. If these goods or services are provided for free or with a discount of more than 10% the value of the donation is the difference between what was paid and the market value.
When giving away stock the company should not include the value as a sale for tax purposes, but the VAT on the item must be accounted for as if the item was sold.