Charity taxes and VAT

taxesWhilst charities are exempt or partially exempt from paying a number of taxes, there are wide range of taxes that charities could be liable to pay and tax issues that they are likely to face when carrying out their charitable purposes and activities.

There are a wide range of taxes that charities will and may have to comply with including: VAT, Income Tax, Corporation Tax, SDLT/LBTT, Capital Gains Tax, Non-Domestic Rates, PAYE, NI, donations (gift aid) and others including insurance premiums tax. 

A recent study by the Charity Tax Group highlights exactly how many, and the range of taxes that charities could be liable to pay, which makes very interesting reading. See the Charity Tax Map here.

How can we help?

We will advise you on whether or not any taxes are payable by the charity and/or the charity’s trading subsidiaries, and if any liabilities could arise from any of activities the charity may be engaged in, either at home or overseas.

Some of the tax issues we have helped our charity and not-for-profit clients with include:19796 MACO FINANCIAL ACUITY NEWSLETTER WEB FILES 06

VAT

Our video library contains a number of short blog videos which cover a range of VAT issues that can impact charities which you may find useful:

We can assist and advise you with a range of VAT and tax issues, including: 

  • Advising on whether it’s payable or not, the reliefs available and if exemptions and partial exemptions could apply, and if they do, making the necessary adjustment calculations for you.
  • Preparing and submitting quarterly VAT returns >more
  • Planning ahead to mitigate potential tax impacts arising from capital purchases and investment programmes.
  • Undertaking VAT health-checks to ensure you are complying with your obligations.
  • Advising on all employment taxes the charity may be liable to pay, including setting up salary sacrifice schemes >more
  • Payroll – PAYE, NI, P60s, SSP, SMP, SSP, deductions, new starters checklists, holiday pay, P45s, redundancy calculations >more


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  • Charities are exempt from income tax and corporation tax on their income, profits and gains as long as they can satisfy all the conditions for the exemption – if you are in any doubt, we will review your operations to ensure that the exemption applies.
  • If you use trading subsidiaries they may be liable to pay tax on their income, profits etc just like any other commercial business. We will advise you on the steps that you need to take to avoid, where possible, a corporation tax liability arising.
  • Other aspects that could create a tax liability include: property development and refurbishment, any activities conducted outside of the UK and disposing of assets.
  • We also help with the preparation of tax returns for charities and trading subsidiaries.
  • We will advise you on what you need to do to maximise your ability to claim Gift Aid on donations you receive.
  • Our advice will cover: the benefits for donors, gift aid & fundraising and membership schemes.
  • Gift Aid Audit – we will review your practices, procedures and processes to ensure that you are complying with HMRC guidance in this area.

Employer Taxes & Payroll MACO TPL planning purple

  • Advising on all employment taxes the charity may be liable to pay, including setting up salary sacrifice schemes >more
  • Payroll – PAYE, NI, P60s, SSP, SMP, SSP, deductions, new starters checklists, holiday pay, P45s, redundancy calculations >more

Tax Advice covering all bases

  • Charities are exempt from income tax and corporation tax on their income, profits and gains as long as they can satisfy all the conditions for the exemption – if you are in any doubt, we will review your operations to ensure that the exemption applies.
  • If you use trading subsidiaries they may be liable to pay tax on their income, profits etc just like any other commercial business. We will advise you on the steps that you need to take to avoid, where possible, a corporation tax liability arising.
  • Other aspects that could create a tax liability include: property development and refurbishment, any activities conducted outside of the UK and disposing of assets.
  • We also help with the preparation of tax returns for charities and trading subsidiaries.

Gift Aid19796 MACO FINANCIAL ACUITY NEWSLETTER WEB FILES 11

  • We will advise you on what you need to do to maximise your ability to claim Gift Aid on donations you receive.
  • Our advice will cover: the benefits for donors, gift aid & fundraising and membership schemes.
  • Gift Aid Audit – we will review your practices, procedures and processes to ensure that you are complying with HMRC guidance in this area.