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Is Tax Due on Webpage Donations

Is Tax due on website donations if someone enjoys viewing my webpage?

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I intend to run a website that basically publishes my horse racing tips on a daily basis. I am providing this purely for my own interest and if others wish to view it and make donations are these donations taxable? And if so how is this so?

 

Thanks in advance

Replies (30)

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Ivor Windybottom
By Ivor Windybottom
23rd Mar 2021 15:51

It depends whether you are operating as a business and whether the tips are part of that business model.

It will be difficult to give this sort of advice over an internet forum, especially without further detail.

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Replying to Ivor Windybottom:
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By More unearned luck
23rd Mar 2021 16:29

"It depends whether you are operating as a business and whether the tips are part of that business model."

Why does the taxability of this income depend on that? Is there a tax exemption for profitable hobbies outside of the trading allowance? If there is, it does seem unfair to me that people who enjoy their work escape tax while others who hate theirs suffer tax, but tax isn't fair is it?

Your point might be relevant to whereabouts in a tax return the income is declared.

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Replying to Ivor Windybottom:
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By Forman
23rd Mar 2021 16:32

I think that the difference is a donation can either be a gift or a 'tip' I.e. for doing ones job well. A almost like an end of year bonus. Gifts in the UK are not taxable but tips can be.

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Replying to Forman:
RLI
By lionofludesch
24th Mar 2021 05:56

Forman wrote:

I think that the difference is a donation can either be a gift or a 'tip' I.e. for doing ones job well. A almost like an end of year bonus. Gifts in the UK are not taxable but tips can be.

Ah - you reckon folk will give you money if your tips are carp.

When you say "can be" you mean "are", of course.

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By Cheshire
23rd Mar 2021 16:11

Its great that you are thinking about it before doing it, most Accountants would love for all of their clients to do this, so its a great time to get some advice from yours.

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Replying to Cheshire:
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By Forman
23rd Mar 2021 17:30

I was of the opinion that the key issue is whether or not a donation in this example is classed as a gift. If so then it doesnt matter how big the donations are; gifts or se are not taxable.

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Replying to Forman:
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By Tax Dragon
23rd Mar 2021 18:18

There's no rule that says gifts aren't taxable (as income). That's why gifts can be liable to income taxes. Ivor's opening response was not completely baseless. While I am oversimplifying when I say that, if you make a profit, that profit will be taxable, that's in part to counter your oversimplification of "it's not taxable if it's a gift".

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Replying to Tax Dragon:
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By Forman
23rd Mar 2021 18:32

Hi the reason there is no rule is because gifts of any amount of money (it really is unlimited) in the uk are not subject to any tax at all. Unless of course they were given away to avoid inheritance tax.
Advice from HMRC can be found at
https://community.hmrc.gov.uk/forums/customerforums/qandasessions/7d261c...

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Replying to Forman:
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By Cheshire
23rd Mar 2021 18:43

Oh dear.

I would accept a gift for responding.

(As an Accountant)

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Replying to Tax Dragon:
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By Forman
23rd Mar 2021 18:38

If you read the story of Matt Goulding of the Hut Group below you will see he gifted millions of pounds to his staff and created 74 millionaires and no one had to pay any tax as it was a gift. Now I think this is bending the rules as it obviously was an annual bonus and definitely linked to employment. But it goes to support the fact gifts are not taxable .
https://www.mirror.co.uk/money/hut-group-founder-turns-74-23135796

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Replying to Forman:
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By Hugo Fair
23rd Mar 2021 19:15

If you read the link you've provided, you'll see he didn't "gift millions of pounds to his staff" ... he "gifted free shares over a period of 10 years" (presumably using one or more Employee Share Schemes).
No details are provided (or claims made) about the tax treatment of the gifts or of any encashment by employees ... but it certainly does NOT "support the fact gifts are not taxable"!

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Replying to Hugo Fair:
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By Forman
23rd Mar 2021 19:30

It may not officially support it but HMRC do make it clear that gifts are not taxable.

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Replying to Forman:
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By Hugo Fair
23rd Mar 2021 19:43

.. sigh ..

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Replying to Forman:
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By Paul Crowley
23rd Mar 2021 19:45

No they do not
A tip is a gift, I give all restaurant servers a CASH GIFT ( A taxable cash gift)
Stop this blinkered view and consider the stuff income and claim relevant costs and expenses and HMRC might give you a REAL CASH GIFT of a tax refund, provided that you pay tax on other income
You tubers run businesses.

The tippers all got something they liked from the work you do. Just like the waiter mentioned above.
If you did not do it they would not pay
Gifts come from people who know you

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Replying to Forman:
RLI
By lionofludesch
24th Mar 2021 05:46

Forman wrote:

It may not officially support it but HMRC do make it clear that gifts are not taxable.

They didn't make it clear to Falkirk Ice Rink.

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By Forman
23rd Mar 2021 16:19

Thank you. It won't technically be run as a business but it would be useful if at least the running costs associated with the site were covered in some way (and these can be quite high in relation to the information that is being published) . However if any 'donations' were greater than the running costs might this make a difference?
The way I see it and please correct me if I am wrong is that I am providing information for anyone freely to use with no contractual obligations whatsoever other than if the site is up and running and people are using it then that's great for them. If the site is 'down' for some reason it is no big deal as there are no expectations on either side. Its basically like a blog with 'numbers' if that makes sense. People can choose to look at my 'blog' (which is essentially a number rating for every horse running that particular day) and if they like it then they can donate.
Any comments would be appreciated.

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By Tax Dragon
23rd Mar 2021 17:04

Your trouble is that, if the donations make it profitable, then the website will be seen as a source of income, and there's no obvious reason why the income shouldn't be taxed.

(But, if there's no income, there's no tax consequence.)

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By frankfx
23rd Mar 2021 19:29

OP

VAT hurdle

If treated as trading income and your circumstances meet certain criteria, you may fall at an expensive VAT hurdle.

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By Forman
23rd Mar 2021 21:57

The link below makes very interesting reading and the comments which state that gifts of any type from anyone are not considered taxable income come from the horses mouth i.e. an official of HMRC. A lot of people get confused when it comes to inheritance tax - that is when gifts become taxable only if they are made to avoid such tax.

https://community.hmrc.gov.uk/forums/customerforums/qandasessions/7d261c...

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Replying to Forman:
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By Hugo Fair
23rd Mar 2021 22:47

I promise this is my last response on this thread (if only to preserve my sanity), but your link contains the following exchange:
Q: "I have received some cash gifts from friends/family this year. Do they count as taxable income?"
A: "The only time it may be relevant for tax is if the gift is in connection with employment or some kind of benefit" (NOTE the last 4 words).
[I would have thought your opening definition ("donations if someone enjoys viewing my webpage") would be interpreted as a gift in connection with .. some kind of benefit (i.e. the enjoyment of viewing)].

FWIW the hmrc.gov.uk/forum provides anecdotal guidance, whereas what you need to find is legislative evidence (or at least a relevant EIM) to back up what you are determined is true.

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Replying to Forman:
RLI
By lionofludesch
24th Mar 2021 05:42

Forman wrote:

The link below makes very interesting reading and the comments which state that gifts of any type from anyone are not considered taxable income come from the horse's mouth i.e. an official of HMRC.

I see what you did there.

Well, you've obviously reseached it very thoroughly so I'm baffled why you've posted the question.

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By Tax Dragon
23rd Mar 2021 22:09

You, me and everybody have gotten hung up on the word "gifts". That's semantics. The question in your OP is a good question. You presumably asked it because you hope or expect that enough people will make sufficient contributions to more than cover your costs and you run into profit. Everyone apart from Ivor has concluded immediately that such profit will be taxable. It's possibly more nuanced than that, as Ivor said, but you won't appreciate the real issues while you rely for your understanding on an HMRC citation that deals with wholly different circumstances.

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Replying to Tax Dragon:
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By Forman
23rd Mar 2021 22:24

Hi Again - I do appreciate the responses and i do feel that it is necessary to delve as deep as possible into the knowledge pool for topics such as this as there could be long-reaching effects if they are misinterpreted.
My research has taken me further down the road of 'Trade' and what HMRC consider to be 'Trade' which is where they have directed customers to look when considering whether a 'donation' can be considered a gift or not.

Their definition of 'Trade' is far from absolute and I quote from the HMRC Business Income Manual "BIM20000 - Meaning of trade" the following;

"There is no statutory definition of ‘trade’. The only further statutory help is to say that ‘trade’ includes a ‘venture in the nature of trade’. As a result the courts have established for themselves what amounts to a ‘trade’, and their decisions provide guidance when the point is in dispute.

"Broadly, ‘trade’ can be taken to refer to operations of a commercial kind by which the trader provides to customers for reward some kind of goods or services. The extension of the definition to ‘ventures in the nature of trade’ allows for the inclusion of isolated or speculative transactions, although not all such transactions will be within the definition".

I would suggest on such a definition this does not include for example a published webpage with information available freely to the global community for which occasional donations are received in terms of gratitude (i.e. the owner of the website is not providing goods or services purely for reward). Gifts do not have to be in recognition of anything. They can be a thank you . They can be given on a whim. They can be an eccentric way of one showing off; the crux is they are non-taxable. And if someone visits a webpage and would like to send a gift to the owner should that person be liable to be taxed whether or not the gifts amount to many thousands of pounds; they are still gifts.
These are my interpretations but am always keen to hear others.

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Replying to Forman:
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By Wanderer
24th Mar 2021 02:40

You are quoting items you've found on the internet completely out of context.
You are making statements then reaching conclusions that those statements don't support.
It is clear that you have made up your mind on the subject.
Really not sure why you bothered to start this thread.

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Replying to Wanderer:
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By Tax Dragon
24th Mar 2021 07:14

Wanderer wrote:

You are quoting items you've found on the internet completely out of context.
You are making statements then reaching conclusions that those statements don't support.
It is clear that you have made up your mind on the subject.
Really not sure why you bothered to start this thread.

Tell you what, though - s/he'd fit right in as an Aweb respondent. The ultimate generalisation [/instantiation] - the present from my brother at Eid al-Fitr isn't taxable, so no present/gift/donation/contribution is ever taxable.

Credit where it's due - the OP has listened a bit. BIM is much more likely to provide the answer than The Mirror.

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Replying to Forman:
By Duggimon
24th Mar 2021 10:14

Forman wrote:

These are my interpretations but am always keen to hear others.

You are asking advice from people who know the answer and arguing by quoting irrelevant "evidence" back.

Your website will provide a service. People will donate money to you through that website.

Do you think anyone donating money to you through the website will do so at random? Or will they be users of the site? If they are users of the site, you supply a service to them and they make a payment to you.

It does not matter whether the amount of this payment is set by you or them. They are paying you for your service.

The money you receive is income. If the income received exceeds the costs in generating it, you will have tax to pay on it.

None of the material you have linked or quoted thus far does anything to counter that.

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Replying to Duggimon:
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By Tax Dragon
24th Mar 2021 10:48

Superb explanation, wholly endorsed.

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Replying to Forman:
By Duggimon
24th Mar 2021 10:17

Forman wrote:

"Broadly, ‘trade’ can be taken to refer to operations of a commercial kind by which the trader provides to customers for reward some kind of goods or services.

I would also add that from your most recent quoted guidance, this part exactly describes your proposal and it is only the fact you are not specifying a price that makes you think it does not. The voluntary nature of the payments does not mean they cease to be a payment for your services.

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By alialdabawi
24th Mar 2021 10:15

Why don't you:

- start your website
- receive gifts for running it
- don't pay tax on them

And then Quod fors feret

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Replying to alialdabawi:
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By Hugo Fair
24th Mar 2021 12:11

Wish I could send you a gift for that one!

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