Last updated: 14 October 2026
Can you get tax relief for giving charities a discount on your services?
Not as a donation. If you give a charity a discount or provide services free, you simply receive less income, so your taxable profit is already lower. There’s no extra deduction for the value of the discount, and it can’t be treated as a Gift Aid donation or qualifying charitable donation, because only gifts of money, shares or land qualify. If you charge the full price and then donate money back, a company can deduct the donation, while a sole trader can use Gift Aid personally.
Discount versus donation
| Approach | Company | Sole trader |
| Discounted or free service | Lower income; no extra relief | Lower income; no extra relief |
| Full price, then cash donation | Deduct as qualifying charitable donation | Gift Aid personally; higher rate relief |
| Gift of trading stock or equipment | Deductible at cost | Deductible at cost |
| Secondment of an employee | Salary still deductible | Not applicable |
VAT on discounted services
If you’re VAT-registered, you charge VAT on the price actually paid by the charity. Free services are usually outside the scope of VAT, but if you supply goods free, output VAT may be due on their cost if over £50 per recipient a year. Some supplies to charities are zero-rated, such as certain advertising and medical equipment.
Example
Lucy runs a design company and usually charges £3,000 for a website. She builds one for a local hospice for £1,000. Her income is £1,000, taxed as normal. There’s no relief for the £2,000 discount. Alternatively, she invoices £3,000 and the company donates £2,000 back. Her company’s income is £3,000 and it deducts the £2,000 donation, ending in the same taxable position, but the charity may value the receipt for its records. VAT would be charged on £3,000 if she’s registered.
Which is better?
For companies, the outcome is usually the same either way. For sole traders, invoicing in full and donating personally through Gift Aid can be better: the charity reclaims 25% basic rate tax and a higher rate taxpayer gets extra relief, although your profit is higher. VAT may make the invoice-and-donate route costlier if the charity can’t reclaim VAT.
Corporate social responsibility
Pro bono work, volunteering time and sponsorship are common. Sponsorship that gives your business publicity is a deductible advertising cost if at a commercial rate.
Common mistakes
- Trying to deduct the value of a discount as a donation
- Charging VAT on the full price for a discounted service
- Sole traders deducting donations in the accounts
- Not checking the charity is registered
Records to keep
Keep the invoice, any donation receipts and the charity’s registration number.
Payroll giving for staff
If you want to support charities through your team, payroll giving lets employees donate from gross pay, so they get immediate tax relief at their top rate. The employer can pay the agency fees, which are deductible.
Frequently asked questions
Can I claim my time as a donation?
No.
Can I deduct free products I give?
Yes, at cost.
Do discounts to charities count as marketing?
Not unless there’s real publicity.
Is pro bono work taxable?
No income, so no tax.
Related: donations to a youth club, selling land to a charity and LinkedIn subscriptions.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with charity pricing and donations. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
