Do charities have to register with HMRC?

DemiDee

I am sure someone will have the answer to this question here (Savvy Sue, maybe?!).

Do charities, even those that come under the £5000 threshold and thus aren't registered charities, have to register with HMRC? If so, what does this entail - submitting of accounts every year as would someone who is self employed? Why would a charity need to do this if it is running on a not for profit basis and if nobody is earning a wage? And..if a registered charity, does one still have to register with HMRC too?

Confused! I only just heard about charities and a possible requirement to register with HMRC.

bargainbetty

Speak to the advisors at HMRC and at the Charities Commission - they will be able to provide you with guidance on this, as it is a very specific query.

Savvy_Sue

I think (but don't quote me on this, check as suggested) that the requirement to register with HMRC is only if you want to reclaim Gift Aid on donations with a declaration.

Now, since that's an incredibly easy way of increasing the amount you get if most of your donors are taxpayers, you'd want to do that!

Of course if you are employing staff you also need to register as an employer. But I can assure you that my only dealings with HMRC have been in those two capacities: employing staff and reclaiming Gift Aid!

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silkcutblue

Do charities, even those that come under the £5000 threshold and thus aren't registered charities, have to register with HMRC?

A: Some do. Most don't.

If so, what does this entail - submitting of accounts every year as would someone who is self employed?

A: You don't submit accounts to HMRC. You send them in to Companies house if the charity has protected its Board by also becoming a Limited company. Otherwise, if the charity is large enough, they need to send the accounts it to Charity Comm. It can be done online and is easy.

If the charity is VAT registered then they would need to do a QTRLY return to HMRC as a charity is afforded no special treatment where VAT is concerned.

If the charity is using PAYE then that has its own form (and an end of year return if I remember rightly). Outsource it as it's a hassle and can be done for very little ££.

Why would a charity need to do this if it is running on a not for profit basis and if nobody is earning a wage?

A: Registering isn't about people earning a wage. You can have a charity run by volunteers but delivering on a Local Auth service contract worth £100k. As mentioned previously, charities are afforded no special treatment where VAT is concerned, ie, if they step out of the little charity-protection-from-meany-taxes then they have to pay VAT. There's a whole page on it on HMRC website. They explain it well.

And..if a registered charity, does one still have to register with HMRC too?

A: Depends if it's VAT registered or not. Depends if the staff are PAYE.

heretolearn_2

Depends...

Some charities do what is called 'charity trading' to raise funds, unless treated in the right way sometimes this money is taxable.

But generally you only need register with HMRC
a) to claim gift aid
b) if you employ people
c) very rarely relating to VAT and the charity trading already mentioned - but not a concern at your size.

Also if you are a charitable company rather than a charitable trust you have to make sure all the right forms have been submitted to all the relevant parties as otherwise HMRC will just get straight on to you for a Corporation tax return. You shouldn't have to do one, but you need to get it straightened out with them. Companies House informs the HMRC of all company registrations whether it's a charity or not, and that triggers the HMRC into expecting tax return.

As a charity you may be asked to do a special tax return called a Trust and Estate return, but it's not every year, and seems to be quite random as to which charities they pick out.