not-for-profits, donations & tax - The Book-keepers Forum (UK)

celliott73 · Newbie

not-for-profits, donations & tax

KTC · Veteran Member

Is the organisation registered with HMRC as a charity for tax purposes?

Was the donation made through the Gift Aid scheme?

adam456 · Member

I think there should not any tax at non profit organization but government also collect some tax from that organizations.

celliott73 · Newbie

So can a not-for-profit register as a charity with HMRC even if they are not a charity with the Charities Commission?

I don't think they have been, but will have to confirm.

KTC · Veteran Member

celliott73 wrote:
So can a not-for-profit register as a charity with HMRC even if they are not a charity with the Charities Commission?

Yes, so long as the organisation can justify to HMRC why they're not registered with the relevant charity regulator. The most simple reason is if its annual income is below the registration threshold (currently £5000). Or they could be 'excepted' or 'exempt'.

-- Edited by KTC on Tuesday 2nd of August 2011 01:29:04 PM

celliott73 · Newbie

Thanks for this.

So, assuming they are registered as a charity with HMRC would the donation (not gift aid, just some money dropped in a bucket at events) be taxable?

Thanks for all the help!

C

KTC · Veteran Member

http://www.charity-commission.gov.uk/charity_requirements_guidance/accounting_and_reporting/preparing_charity_accounts/charities_and_corp_tax.aspx

Charities are generally exempt from paying corporation tax, but they are required to complete and submit corporation tax returns in two specific circumstances:

http://www.hmrc.gov.uk/charities/tax/returns.htm

KTC · Veteran Member

http://www.charity-commission.gov.uk/charity_requirements_guidance/accounting_and_reporting/preparing_charity_accounts/charities_and_corp_tax.aspx

"Charities are generally exempt from paying corporation tax, but they are required to complete and submit corporation tax returns in two specific circumstances: "

http://www.hmrc.gov.uk/charities/tax/returns.htm

celliott73 · Newbie

cheers.

Dalbir · Senior Member

KTC wrote:
celliott73 wrote:
So can a not-for-profit register as a charity with HMRC even if they are not a charity with the Charities Commission?
Yes, so long as the organisation can justify to HMRC why they're not registered with the relevant charity regulator. The most simple reason is if its annual income is below the registration threshold (currently £5000). Or they could be 'excepted' or 'exempt'.

-- Edited by KTC on Tuesday 2nd of August 2011 01:29:04 PM

Hi Clayton

This is a real grey area, best to seek guidance form HMRC, as there are many organsations with a mission to be not for profit but do not fit the criteria set by HMRC.

You tend to have to register with HMRC to get tax relief. I know registered charities and Community Amateur Sports Clubs (though not necessarily registered as charity, they are registered with HMRC) can claim tax relief on profits.

Dalbir

YLB-HO · Guru

I find that - how the accounts are presented, tends to flag up if the donations is taxable or not. If the donations are treated as Income - they are taxable, but if they are treated as "donations" which are to be spent on legitimate expenses (now or in the future), then they are not. A non-profit organisation is not susposed to make money, and has to be careful if it builds up reserves.

A non-profit organisation will normally have "rules" about what happens to any money received. If (like organisation I know), it goes into the pocket of the person running it - then its taxable. But if there are rules, which are followed covering every eventuality which means any money received goes to the "benefit" of say people in need, or a local area - or if wound up the money would go to a simular "non-profit" organisation then again it would not be taxable.

One thing I will mention - donations should not have any strings attached. If they have then again depending on the conditions depends on if its taxable or not.