In the last few weeks all the political parties have been clamouring for funds. If you make a personal donation to a political party, that has no tax implications. It comes out of your taxed income and doesn’t qualify for tax relief as it is not a charitable gift.
What if your personal company makes the political donation? This is permitted, and it saves you having to extract the funds from the company in order to make the donation. The company’s donation doesn’t create a taxable benefit in kind for you as the director or shareholder of the company. However, it is not tax deductible for the company.
Where the political donation exceeds £500 it will have to be separately reported by the recipient party, which may attract adverse publicity. All political donations made by the same source must be aggregated within a calendar year, so the £500 threshold can’t be avoided by making several smaller donations spread over the year.
Where your company pays for, or contributes to, a campaign which is wholly relevant to its trade, the expense may be tax deductible. For example, donations made to a collective publicity scheme organised by the local town council would be tax deductible.