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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4715
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am a single person wanting to set up an online business selling

Customer Question

I am a single person wanting to set up an online business selling digital products. I want to give all profits to charity. I am not affiliated or connected to any charity. I already have income from a pension so don't need any extra income. Can I run this operation as a sole trader business, give the money to charity and not have to pay any tax? Or will I be taxed on the income despite giving it to charity?
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Gifts to charities are treated differently for tax purposes.

If you are trading as a LTD company and make donations and your business gets nothing in return for the money it gives then it is a straightforward donation. Companies - but not sole traders or partnerships - that give money to charity can deduct the value as a 'qualifying charitable donation' from their Corporation Tax profit. The charity won't pay any tax on the donation either, provided they use the money for charitable purposes.

Where as donations to charity by sole traders and partners may fall under Gift Aid scheme for individuals provided all the conditions of that scheme are met. They're personal donations so you won't be able to set them against your profits for tax purposes. But your chosen charity will be able to claim back an amount equivalent to tax on the donation at the basic rate.

More information on giving to charity can be found here
http://www.hmrc.gov.uk/businesses/giving/sponsorship.htm#3

I hope this is helpful and answers your question.


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