Making and Selling for a Charity

pearsjoh

Hi I've started selling craft items on Etsy and am giving the profits to a charity I volunteer at. In 6 months I've sold £850 with Etsy costs of about £100, materials and shipping costs of  about £200 and I've given £550 to the charity.  I trade through my own bank account. This venture has been more sucessful than I expected and never thought I would exceed the £1000 micro business limit where HMRC ignore earnings.  Do I have to declare this to HMRC as I do everyting on behalf of the charity? Any advice or thoughts appreciated.!

theoretica

I believe you do need to declare as it sounds you are doing this informally - on the plus side if you pay income tax on other income you can gift aid your donation to the charity.

The alternative would be to give the items to the charity for them to sell.

oldbikebloke

you are not a registered charity therefore yes of course you are not exempt from personal tax on your earnings. 

They are your earnings, you are trading for profit, you are not trading on behalf of the charity as one of their staff. I appreciate you see this as philanthropic, but that is not how tax law operates when it is you personally doing the trading.
So any profit in excess of £1,000 is taxable against you even if you give it all to charity.
The "allowance" is in reality a "cost" so: gross income - allowance = net profit. It is the net profit that is taxable, not the gross income. 
Also remember if you claim the allowance you cannot deduct any actual costs whatsoever (your £300 mentioned above) when working out the net profit.

Obviously if you can gift aid when donating to the charity that may impact your personal tax if you are a higher rate tax payer, if not, it won't.

rach_k

If you are giving all of the money to the charity, you may be better asking the charity to accept payments for you (or for them to set up a PayPal account or similar in their name that they can give you access to) and then selling the items as them, rather than as an individual.  Then you'll be a volunteer making things for them and will claim back your expenses as you would normally (or pay for them using the PayPal account).  This will probably mean you're also covered under their insurance, which you should have if you're selling anything.