Donation income taxable limited company

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Is donation income for a limited company income taxable income? The company has no other revenue apart from donation income (around 500k - £1m per annum) from one individual. This money is used for video production to produce videos for a website which they receive no revenue for. Could anyone point me on the specific HMRC guidance on this?

Replies (15)

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By jonharris999
05th Apr 2023 10:35

I vote yes. You say "they receive no revenue for" the videos. Yes they do. They receive the "donation" for them.

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By WhichTyler
05th Apr 2023 10:43

Is the company a charity?

If not, the arrangement you have described sounds like the worst possible way of arranging whatever it is that the parties are trying to achieve...

But I could be wrong; did the significantly wealthy individual or the company principal get any advice before making these commitments? If so, what was it?

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By Tax is always taxing
05th Apr 2023 10:48

That's a strange one. I wouldn't just be considering if it's taxable (which it probably is). Have you considered whether it should be VATable also?
The nature of the agreement seems to be that someone is paying them to provide content for a website... but as always the devil is in the detail.

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VAT
By Jason Croke
05th Apr 2023 11:13

Sounds like the company receives £1m in donations to produce a video, so we have a supply (the video) and we have consideration (the donations), at first sight would appear to be taxable income.

I assume OP means VAT when they ask "is this taxable income?"

For whose benefit is the video? If I (as an individual) ask for a video to be produced for my website, I would get the video made and then an invoice from the supplier, taxable supply. If I am the company producing the video and I produce the video for my own promotion (say promoting Scientology or some other cause) and someone wants to give me money to help me do that and there is absolutely no benefit derived by the donor then potentially it could be a donation but would need some precision in getting this right, considering there is potential £1m at stake.

Donations have to be freely given with nothing in return.

Start here and focus on what benefit the donor gets for their money.
https://www.charitytaxgroup.org.uk/tax/vat/business-vs-non-business/dona...

Can I ask the OP, what do you think the answer is? Always a little disappointing when a poster asks a question and does not offer at least an angle as to their thinking/opinion.

Can't point you to specific HMRC guidance because its not clear what the entity is (for profit/not for profit), we don't know what connection the donors have to the company, we don't know the relevance of the video that is produced.

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Replying to Jason Croke:
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By Hugo Fair
05th Apr 2023 12:43

We don't even know in which country/ies all the various transactions are taking place ... or indeed whether there's any correlation between amount of "donation income (around 500k - £1m per annum)" and quantity of videos produced ... or whether donor has any 'editorial' control ... or ...

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Replying to Hugo Fair:
VAT
By Jason Croke
05th Apr 2023 13:02

Hugo Fair wrote:

We don't even know in which country/ies all the various transactions are taking place ... or indeed whether there's any correlation between amount of "donation income (around 500k - £1m per annum)" and quantity of videos produced ... or whether donor has any 'editorial' control ... or ...


Indeed (to all of that).
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Replying to Jason Croke:
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By marion_morrison
13th Nov 2023 10:42

Would money left by an individual in their will to a limited company be classed as a donation?

If so would this be taxable?

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Replying to marion_morrison:
By Ruddles
13th Nov 2023 10:57

Could you be any more vague?

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Replying to Ruddles:
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By marion_morrison
13th Nov 2023 11:02

No -Any links to information in that general direction would be great.

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Replying to marion_morrison:
By Ruddles
13th Nov 2023 11:14

Sarcasm not your strong suit, then? So here it is in black and white - if you want a meaningful response you will need to provide a lot more detail. As it stands, the answer is simply "It depends".

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Replying to Ruddles:
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By Justin Bryant
13th Nov 2023 13:01

Eh? To use your favourite word, her question is pretty obvious re CT and has been discussed here before re DoVs and SDLT etc.

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Replying to Justin Bryant:
By Ruddles
13th Nov 2023 13:21

Based on the information provided, if you believe that the answer to the question "If so would this be taxable?" is anything other than "it depends" I'd love to see it.

"Do a search of this site" doesn't count.

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Replying to marion_morrison:
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By Leywood
13th Nov 2023 12:32
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By Bobbo
05th Apr 2023 13:59

This https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim41810 is the closest to guidance I've ever found.

As others have said, further detail is needed about the scenario for anyone to truly assist.

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Replying to Bobbo:
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By WhichTyler
05th Apr 2023 15:16

That's just what I was looking for...

Fourth bullet seems to point to taxability, but that's based on the bare information provided...

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