what would be the tax status of lots of small gifts?

aplegjnf

I am just wondering about what tax would be payable on lots of small cash gift. For example if 100,000 people gave me £10 towards a project I am looking to do - what tax category would it come into? or similar 10,000 people gave me £100. I know there is a tax free limit on gifts of about £3500 or so isn't there? Is this total gifts or one gift per person?

thanks in anticipation

P.

CLAPTON

genuine gifts area tax free

there is a 3000 limit concerned with IHT but that doesn't seem the issue here

TM1976

As Clapton says gifts are tax free, the only possible tax implication for gifts is inheritance tax.

I'm not sure from you question what situation you are describing. It's possible that the transactions you are undertaking may be deemed as trading by the tax authorities and as such your profits may be liable for tax.

aplegjnf

I really want to set up a project and I have friends all over the world who are willing to help me. It is feasible I could get friends and friends of friends who would give me thousands to get the project up and running. I just wouldn't want to fall foul of the law, and / or end up having to give the government a whacking percentage! It would involve purchasing property and running a charity based enterprise, does it make any diffence where the money given gets used?
so this IS a serious question.
thank you for the replies so far.
P.

fengirl_2

You need to set up a proper legal structure for the organisation and make sure it has charitable objects if you want it to be a charity eventually. Once the organisation is set up (you will need at least 3 trustees), you will be able to open a bank account and accept donations from your contacts. The money could only be spent on furthering the charitable objects of the organisation.
Setting up a charity IS a serious undertaking and you need support and help from your local CVS (Google your town and CVS). They are funded to support the setting up of vol orgs.

tyllwyd

And have a look at the Charity Commission website for more information on setting up & running a charity
http://www.charity-commission.gov.uk/about_charities.asp

fengirl_2

The charity would need to own the property if the money was donated to the charity. Under charity law, if the charity folded, all the assets would need to be transferred to another charity with similar objects. No trustee or member of a charity can benefit personally from their position in the charity.

TM1976

If you set up a charity donations are tax free, in fact tax relief is available at source.

If you are setting up a charitable venture really you should set up a separate entity to do this as if you get donations, purchase a property etc these assets would be held in your name and be your property.

Charities are highly regulated entities. They have their own regulator, the charity commission. They have their own reporting requirements and laws and have more stringent audit requirements.

If you are setting up a charity it's no where near as straight forward as setting up an limited company or starting to trade, as such if you are serious you should take some professional advice.

See the charity commission website: http://www.charity-commission.gov.uk/

fengirl_2

Have to disagree with TM. If the money is donated to the charity, the property would be held in the name of the charity, not you, and could not be disposed of without the CC's permission, and the proceeds could then only be used for the objects for which your charity is set up.
Tax relief is not due at source on charitable donatins. if the donor is a UK taxpayer, HMRC will add tax relief to the amount of the donation - it does not affect the liability of the donor, except if they are a higher rate taxpayer when they would get higher rate relief only for the donation.

TM1976

I agree with Fengirl here, reading my original post it's not clear on the point I was trying to make.

You need to set up a charitable entity seperate from yourself here to segregate your affairs from the charitable venture. By this I mean you need to go and do that first rather than start getting some donations, buy a property etc as there will be confusion over ownership etc. It's not like setting up a business where you can simply start trading, tell HMR&C after 3 months then do a tax return. You need to go and set up a proper charitable structure first, to do this you will need professional advice.

Profits of charities (or surpluses) are not taxable. Donations I don't know much about the operation of the scheme but the charity gets the benefit for the donation not the indivual (unless as Fengirl says they are a HR taxpayer).

barak

fengirl wrote: »

Tax relief is not due at source on charitable donating.

Except, surely, under Payroll Giving?