Tax on a prepaid card for charity

Parkhall

I work as a volunteer for a small registered charity.

If our charity was to put money onto my personal prepaid card (Revolut) for purchasing goods for charity purposes, would HMRC regard that as taxable income? I would have receipts to prove all purchases.

In a typical year this could be as much as £20 - 30K in purchases.

pramsay13

It's not taxable income but problematic for a few reasons.

It sounds as though the charity is sending you an arbitrary amount and you are using that to buy things. You would be better buying them and being reimbursed for the exact amount.

If we are talking £20 - £30k that is far too much and the charity should purchase things itself.

It could be against your own bank account terms and conditions to use it for that purpose.

Any guarantees etc could well be voided by being purchased by a third party (you).

What is the purpose? Are you collecting some kind of points or bonuses on the purchases? If so these could well be taxable depending what form they take and they should belong to the charity.

What happens if you are the target of a scam and the account gets emptied? Who would lose out?

For all these reasons and to protect yourself and the charity I would say stop immediately.

Isthisforreal99

I'm sure donors would be very surprised to find that £20-£30k was being paid to an individuals bank account, whatever the reason.

For many reasons, including transparency, this is a bad idea.

Do thinhgs by the book and get a corporate card.

flaneurs_lobster

I'm aware of your other posts seeking advice about prepaid debit cards for use by your charity.

If the amounts you were talking about were a few hundred pounds over the year then I doubt if there would be much concern, but £30k running through your personal account would never be a good idea, not just from a tax perspective.

What do the rules and regs of the Charity Commission (or equivalent if Scot/NI) say about separating the Charity's funds from accounts of persons working on their behalf? Bet they don't encourage it.

Who does your charity bank with? What have they said about supplying payment methods?

Parkhall

Thanks to all for the replies.

The reason I am exploring this is because we had an Equals business prepaid card for years to use for our charity purchases. Equals waived the monthly fee for charities but this year they have begun to apply the fee. (£25 pm) We only need the card for about two months per year so it would be £250 wasted.

So I have been searching for an alternative and have not found another prepaid business card without monthly fees. Does anybody know of one (or even one with much lower fees) ?

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81968289#Comment_81968289

I assume you have already perused the lead table below of such cards?

https://www.moneysupermarket.com/prepaid-cards/business/results/

From a charity compliance point of view, I also share concerns of the quantum of charity cash you propose crediting to your personal account. This should be avoided, even if there is a modest annual cost to do things properly.

etienneg

I totally agree with the comments above recommending that you DON'T do this.

Who do you bank with? CAF Bank operate an account for charities (I used to be a treasurer and used CAF Bank over many years) which costs £5 per month, with all the usual facilities of a current account (except overdraft) and more:

https://www.cafonline.org/home/caf-bank/current-account

With this account you can get one or more business bank cards that facilitate purchases by the approved holder(s) direct from the charity bank account. There is no additional charge for these cards, so even if you get free banking at the moment the cost of this account (£60 over a year) would be small compared with the new card fee (£300 per year). You could consider this account instead of, or in addition to, your existing account. (The charity of which I was treasurer didn't use this card, as in our case there was no need, so I can't give any practical details, but I have no reason to suppose it doesn't work as described.)

Parkhall

https://forums.moneysavingexpert.com/discussion/comment/81968310#Comment_81968310

https://forums.moneysavingexpert.com/discussion/comment/81968467#Comment_81968467

Thanks very much. I had a look at CAF bank but it wouldn't suit us as they only issue normal debit cards with an ATM withdrawal limit of £300. We require prepaid cards with a much higher limit.

flaneurs_lobster

https://forums.moneysavingexpert.com/discussion/comment/81968915#Comment_81968915

Do you mean that the daily spend limit of £1000 is not sufficient? Or are you actually needing to spend in cash?

Emmia

https://forums.moneysavingexpert.com/discussion/comment/81968915#Comment_81968915

What are you spending this amount of money on? And why does it need to be a prepaid card payment specifically? Wouldn't a bank transfer also work if it's large sums infrequently...

flaneurs_lobster

https://forums.moneysavingexpert.com/discussion/comment/81969020#Comment_81969020

Well it's a charity that in two months of the year needs two people to spend £20-£30,000 in person.

Sounds pretty specific, don't think the OP is going to be able to give much more detail without making anonymity pretty hard to maintain.