Charity fundraising event - taxable income?

Charity fundraising event (not run by a charity) - taxable income?

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Hello

If a company (not a charity) runs an event to raise money for charity, would that income be taxable to CT? If so, presumably not as trading income? What about any associated expenses, would they be allowable? Relief would be due for any qualifying donations then made, so it 'feels right' that any income would be taxable.

Thanks

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By David Ex
05th May 2022 12:04

I would assume that it depends who is doing what and in whose name.

https://www.gov.uk/government/publications/charity-fundraising-events-ex...

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Replying to David Ex:
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By aidious
05th May 2022 12:26

So Joe Bloggs Limited, runs a 'Raise money for Cancer Research' event, say. It incurs costs for running the event, and raises money. It then donates the net profits raised to a registered charity. It's the treatment of the expenses and money raised I'm unsure of.

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Replying to aidious:
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By David Ex
05th May 2022 12:45

aidious wrote:

So Joe Bloggs Limited, runs a 'Raise money for Cancer Research' event, say. It incurs costs for running the event, and raises money. It then donates the net profits raised to a registered charity. It's the treatment of the expenses and money raised I'm unsure of.

If they are putting out buckets to accept donations for the charity, I don't see that as taxable income of the company.

https://www.gov.uk/tax-limited-company-gives-to-charity

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Replying to David Ex:
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By aidious
05th May 2022 12:50

Thanks. The payment (i.e. expense in the company's books) to the charity would be deductible (as a qualifying charitable donation), agreed. But what about the income they also book (which they have done). Taxable? So that the net effect for CT is NIL overall?

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Replying to aidious:
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By WhichTyler
05th May 2022 13:35

aidious wrote:

Thanks. The payment (i.e. expense in the company's books) to the charity would be deductible (as a qualifying charitable donation), agreed. But what about the income they also book (which they have done). Taxable? So that the net effect for CT is NIL overall?

It may depend on how much they have made (or rather lost) in the rest of the business. GA donations are not a 'deductible expense' but a charge agaist income so cannot be used to create (or extend) a loss so if the business made a tradin gloss in other areas, they may not be able to offset the donation against future profits...

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Replying to aidious:
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By WhichTyler
05th May 2022 12:45

Taxable and VATable trade, like selling tickets to any event

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By jonharris999
05th May 2022 13:38

This isn't trading income, nor is it donated expenditure. If it had to touch the company's books at all, which I would try to avoid for several reasons, I would make it Suspense in and out.

The main problem with this is it's inefficient. The company isn't donating any of its own money, so it would be better for everyone if the donations were made direct from the donors to the charity via Gift Aid. They'll be worth more to the charity, and HR donors can have HR relief.

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Replying to jonharris999:
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By Tax Dragon
05th May 2022 14:24

Had So Joe Bloggs Limited taken advice beforehand, contacted the charity beforehand, got itself sorted beforehand, I would agree.

Instead...

aidious wrote:

So Joe Bloggs Limited, runs a 'Raise money for Cancer Research' event, say. It incurs costs for running the event, and raises money. It then donates the net profits raised to a registered charity.

aidious wrote:

what about the income they also book (which they have done).

That makes the income (taxable) company income. Imho. If you don't take the advice, you have to accept the consequences. Imho. (Hopefully there's a profit, relief [not as an expense] is available and, faff aside, it hasn't cost them. I make no comment on VAT.)

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Replying to jonharris999:
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By Jane Wanless
05th May 2022 17:13

The problem with participants making gift aid donations may depend on the nature of the event. If it's eg tickets to a dinner, diners aren't simply making a donation, but paying for dinner. There's therefore no gift aid as there's no gift from the diner to the charity.

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By jonharris999
05th May 2022 22:59

Yes, m'learned friends are making persuasive points here, and making me queasier.

Look, the company shouldn't have done this. It's inefficient and it has pitfalls. They should have been prepared to spend expenses on the event (or frankly why are they bothering?) and should have allowed the charity to deal with the income directly, whether it was then Gift-aidable or not.

Better still, next time let the charity run the whole thing and, if they want to be associated with it, just make a donation.

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Replying to jonharris999:
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By Tax Dragon
06th May 2022 06:31

I've changed my mind. If GA is not in point because pundits get something in return, then isn't what the company did just as efficient - and no more faffy - then doing what you say? Probably actually less faffy. So... why do you say it shouldn't have done it?

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Replying to Tax Dragon:
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By jonharris999
06th May 2022 08:22

This could be a good first. This could be each of us persuading the other to reverse position at the same time.

Well, the idea here is...what? A business conducts an activity, the apparent purpose of which is to support a charity, but it limits its contribution merely to handing the charity the surplus of the event income over the event expenditure? It doesn't actually cost the business anything? Gee, says the charity, thanks very much, guys. What exactly was in it for us? If you had simply 'sponsored' the event by, say, helping a bit with the setup and organisation, encouraging attendees etc, then we could have used GA (at least if that was allowable by the nature of the event) and at the very least, made direct donor relationships.

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Replying to Tax Dragon:
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By WhichTyler
06th May 2022 10:22

Fundraising events are pretty inefficient even when run by charities, but even worse when third parties do it

Charities (or their subsidiaries) can at least benefit from
VAT exemption on all event income (tickets, sponsorship, adverts etc)
GA on payments over minimum ticket price
GA on sales of donated goods (eg auction)
Access to donor details for follow up campaigns or cultivation
Opportunity to advocate for their cause to useful stakeholders, contacts

Let alone the possibility that the company has set up a separate trade that may have CT consequences

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