Charitable letting

01 September 2009

Issue: 4221 / Categories: Forum & Feedback , Business , Income Tax

It has been suggested that charitable donations should be made by way of a limited company, but is there a tax issue if the company director were then to rent a privately-owned villa to the charity?

We have a client who trades through a limited company. He is interested in making donations to a registered charity for disabled children through the limited company possibly under gift aid to claim tax deduction.

While we can see no issue with this our client wants to offer the use of his privately-owned villa to the charity and we wondered if the donation from the company could be used by the charity to fund the let.

We have expressed reservation that the donation and let cannot be linked and wondered if there is another way of doing this.

Query 17 463 – A.S.

Reply from Gardener

Presumably the company is close and the client is ‘connected’ with the company as controlling shareholder. The problem with the arrangement proposed is in TA 1988 s 339(3B) (this appears not to have been moved to...

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