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Thrive Third Sector – 13 March 2015
Direct Tax Issues for Charities
Myth busting
• Charities don’t pay tax
• We are not trading because we are not seeking a profit
• The profits are not taxable because we are using them for charity
Direct tax – the exemptions
• Property
• Savings and investment
• Chargeable gains
• Royalties (e.g. use of logos)
• Lotteries and fundraising
• Applied for charitable purposes
Direct tax – taxable income
• Sponsorship & merchandising
• Charity shops – bought in goods
• Property sales connected to development
• Solar panels
• Use of trading subsidiaries
Non qualifying expenditure
• Expenditure not applied for charitable purposes
• Loans/investments must be for the benefit of the charity and not for avoidance of tax
• Documentation for loans
• Possible loss of tax exemption
Gift Aid – getting it right
• Subsidiaries– It must be a payment!– Watch for profit mismatches– Updated Charity Commission guidance on Gift Aid
• Donations– Benefit rules– Auctions
• Paperwork– Use the right wording
Other tax issues?
• Working overseas– Permanent Establishments– With-holding tax – Relief for tax suffered– Employment tax
• Other UK not for profits– Consultation on Community Amateur Sports Clubs– CIC’s – are not charities!
Is charity tax really a myth?
Where to get help: Jon Sparkes, Senior Tax Manager, Bishop Fleming LLP01752 [email protected]
For information of users: This material is published for information. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.
