Donations showing as expense on profit and loss

Hi there,

I’m just completing my self-assessment and have been using the Profit and loss capability in QuickFile to take a look at income and expenses my business had incurred in the tax year 2020-21.

Throughout the tax year 2020-21, I made around £515 worth of donations to charities. These were all tagged as ‘Donations’ using the 8200 code inside QuickFile.

These donations are actually showing as an expense in the P&L.

Can someone please let me know if this correct? I thought donations in QuickFile were recorded similar to drawings. I wasn’t expecting to see them listed as expense.

Donations as a sole trader or partnership are recorded as drawings. When it comes to filling your self-assessment tax return then you are maybe able to fill the relevant box with your donation. But this depends on the donation and your tax band. So, you don’t record the donation as a donation in your books (quickfile account).
Hope that helps

Hi @rhc,

Thank you for your reply.

In that case, it seems like I’ve set up donations incorrectly in QuickFile. Currently they are under nominal code 8200 (Donations), which seems to create an expense. Rather, as you say, they need to be set as drawings for a sole trader.

Do you know if this particular code: 8200 (Donations) is only relevant to limited companies who can use donations as an expense?

Personally if they are a registered charity then the donation is allowable, so expense to the P and L is correct.

Hi @Paul_Courtier,

Thanks for your message.

I donate to three charities every month and they are all registered.

Are you saying that I can keep the transactions for the donations as they in QuickFile (under nominal code 8200) and use them as an expense when doing my self-assessment?

I’m a little confused as I thought donations to charities were not an allowable expense for sole traders.

It’s fine to claim donations as a p and L expense providing the donation was not gift aid.

If the donations were of gift aid nature then they should not be in the P and L but reported seperately on your self assessment and marked as drawings.

Its important to know thaf for the P and L expense to be valid the charity must not claim relief on the donations. Otherwise tax relief is claimed twice.

The ideal scenario with no come backs would be to go back to these charities and ask if you could change it to a gift aid donation, then claim it on your self assessment and not in the P and L as an expense.

1 Like

Okay, many thanks for explaining @Paul_Courtier.

This topic was automatically closed after 7 days. New replies are no longer allowed.