Crowdfunding donations- classed as income?

pinkgirlythoughts

Apologies if this is not the best board to post this query on- it seemed the most appropriate one I could find.

Are contributions to crowdfunding platforms counted as taxable income for the recipient? I have an idea for a product, but need funding to initially get it off the ground. Crowdfunding has been suggested to me as a good way of doing this, but I'm struggling to find any information about this online. I *think* that I could ask for gift donations, and that these would not be taxable (less than £5 per donator, for example), but what about slightly larger amounts- perhaps if the investor also received a copy of the product?

If anyone could point me in the direction of any information about this, I'd be very grateful.

Pennywise

Depends on what the "donor" gets. If they get something in return, i.e. goods, then it's almost certainly going to be taxable as trading income.

If they get a part of the business, i.e. shares, then it's not trading income and non taxable.

If it's a loan you intend to pay back, it's a loan and non taxable.

tacpot12

To roundup Pennywise's comprehensive answer, I would say that if the donor gets nothing in return (and the gift is not a loan), then given that you are not a registered charity, the 'gift' will be regarded by HMRC as trading income.