Volunteering for School but unsure on tax implications

NurseMoneySaver1122

Hi all

My Father (a self-employed builder) is kindly building a shed for my daughter's school for free (material costs only). This isn't something he has done before so I want to ensure he covers himself and does everything correctly regarding records for tax purposes, especially when doing something so generous for my daughter's school!

Some things I am reading indicate he keeps this completely separate from his business, treating it as private and keeping outside of his accounts.

Other things indicate invoicing the school for materials only, keep material receipts and include a note (from the Head presumably) explaining "shed build for SCHOOL NAME at ?? material cost, labour provided as goodwill gesture".

He will likely be paying for materials upfront and the school repay later, so presumably he will need to put this through the books because of this alone. Just really worried about causing any problems for him when it comes to his taxes!

When does a builder stop being a builder and just a man with a skill wanting to volunteer his skill to someone in need?

MyRealNameToo

Is he self employed or does he operate via his own company?

Unless there is good reason not to want to increase turnover then I wouldnt over think it and put it through the business as normal. There will be zero profit on it so no impact on his tax.

sheramber

zig he is buying the materials through his business then it should be shown in his accounts.

NurseMoneySaver1122

https://forums.moneysavingexpert.com/discussion/comment/81934131#Comment_81934131

He's self employed.

No, I just want to ensure he is crossing all the t's and dotting all the i's.

As he has never done anything like this before, so I want to ensure he inlcudes everything necessary, and doesn't end up having to pay tax on something he has earned nothing from, due to not including something he was required to do so.

So put through books option:

• include recipts
• include letter from school acknowleding this a shed build at cost only, labour provided as goodwill.

Anything else advisable?

MyRealNameToo

Can keep the letter if he wants but really just needs the receipts for the materials bought and the invoice for what they've charged the school. One from the other will be the profit which will be £0 in this case.

Putting it through as business activity should mean that any insurances he holds will cover a claim against him in the unlikely event that someone gets injured etc because they made a mistake etc.

jaybeetoo

Put it through his accounts as “Pro bono”. That way it’s a business activity and, as stated above, he’s covered by his business insurance.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81934248#Comment_81934248

That letter would be of no value.

It seems simple to me and just like any other job the business does.

There is a direct cost of labour, direct cost of materials, indirect costs of operating the business (overhead), a sales value, and profit.

In this case, the sales value will be the direct cost of materials only. Hence, the business will absorb the direct cost of labour plus indirect overheads. The profit is therefore negative. Any business can sell any job to any client at a loss - either intentionally (as in this case) or unintentionally.