Can I claim charity donations as a sole trader?

Not usually as a business expense. In 2026-27, give through Gift Aid instead: the charity adds 25p for every £1, and higher-rate taxpayers claim extra relief on their tax return.

Plenty of tradespeople give to a local hospice, a sponsored run or a mate's fundraiser, and many put it through the books. The rules below follow GOV.UK and HM Revenue and Customs' Business Income Manual (BIM), checked on 17 October 2026.

Why a donation is not a business expense

GOV.UK's page on subscriptions for the self-employed lists "donations to charity" among the costs you cannot claim, alongside gym membership and payments to political parties.

HMRC's manual (BIM47405) explains why. Charitable subscriptions "are almost always made wholly or partly for non-trade purposes", so they fail the rule that a business cost must be wholly and exclusively for the trade. There is a narrow exception: where you have a direct trade connection with a charity, a small annual subscription may be allowed if it can reasonably be claimed as an expense of earning your profits.

Gift Aid: the route that works

Gift Aid gives relief through your personal tax instead. GOV.UK says:

• the charity can claim an extra 25p for every £1 you give, at no cost to you
• you sign a declaration for each charity you give to
• your donations must not be more than 4 times the tax you paid in that tax year
• if you pay higher-rate tax, you can claim back the difference between the tax you paid on the donation and what the charity got back, through your Self Assessment tax return

Which gifts count where

On sponsorship, GOV.UK's subscriptions page says that although you cannot claim donations, you may be able to claim for sponsorship payments. Its sponsorship guidance is written for companies sponsoring a charity, and the test is that you get something related to the business in return, such as your logo used, a link to your website or a stall at an event. In our reading, the same test fits a sole trader, and a local team that is not a charity. Our guide on advertising and marketing costs covers that.

Giving stock to a charity

Section 108 of the Income Tax (Trading and Other Income) Act 2005 covers a gift of trading stock: an article you made, or of a kind you sell, in your trade, given to a charity. HMRC's manual (BIM45155) says "no amount is brought into account as a receipt", so you keep full relief for what the item cost you, and no claim is needed. If you or someone connected to you gets a benefit linked to the gift, that benefit is taxed as a trading receipt, and there is no relief where the gift is part of tainted charity donation arrangements.

A worked example

A roofer gives £300 to a local hospice in 2026-27 and signs a Gift Aid declaration.

If the roofer pays tax at the basic rate, the hospice still gets the extra £75 and there is nothing more to claim. If at least £375 of the roofer's income is taxed at the higher rate (income over £50,270, outside Scotland), they claim £75 back on their tax return, so the gift costs them £225. Put through the business, it would have been disallowed. This is an example only.

What this means for you

In our reading, the simplest approach is to keep donations out of your business records and pay them from your own money, with a Gift Aid declaration each time. You get the same result for the charity, plus your own relief if you pay higher-rate tax, and your books stay clean.

Steps for giving the right way

1. Pay donations from your personal account, not the business one, where you can.
2. Tick the Gift Aid box or sign the charity's declaration.
3. Keep a note of each donation, the charity and the date.
4. Check you pay enough tax to cover the Gift Aid the charity reclaims.
5. Enter your Gift Aid donations on your Self Assessment tax return.
6. For sponsorship, keep what you got in return, such as a photo of your name on the kit.

The free MTD check shows when Making Tax Digital starts for you, and the trades section has more guides.