Naive Question about selling for profit, to donate
Naive Question about selling for profit, to donate
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AdviceHunter

Original Poster:

40 posts

145 months

Monday 10th July 2017
quotequote all
Possibly a naïve question but wanted to double check something before I commence on my well-intentioned act.

Originally from UK, now based overseas. Something has recently touched my heart and I would like to raise some money for a UK charity involved and have identified an item I think will sell well. Supposing I bought 100 bobbins for £1 and sold them for £10, with the sole intention of donating the whole proceeds (£1,000) to charity, would I be liable for income tax on the proceeds? I will make no profit from the sales and do not intend to make this a regular affair. One job lot buy, sell the items, make the donation.

I am not a UK tax payer nor do I wish to become one due to 'carrying on a business' in UK on the back of this, should that make a difference.

Eric Mc

125,779 posts

295 months

Monday 10th July 2017
quotequote all
Where would the business operate?

AdviceHunter

Original Poster:

40 posts

145 months

Monday 10th July 2017
quotequote all
Eric Mc said:
Where would the business operate?
Items bought in UK, single purchase. Items sold solely in UK.

Eric Mc

125,779 posts

295 months

Monday 10th July 2017
quotequote all
And would you operate as a sole trader or a limited company?

AdviceHunter

Original Poster:

40 posts

145 months

Monday 10th July 2017
quotequote all
Eric Mc said:
And would you operate as a sole trader or a limited company?
I guess I would be a sole trader. I certainly intend on opening a limited company in order to do this.

Simpo Two

92,962 posts

295 months

Monday 10th July 2017
quotequote all
Is there really a 10-fold margin on bobbins?

It might be simpler just to send the charity a donation from your own funds - and in that way you are actually donating, not just handing them other people's money...!

AdviceHunter

Original Poster:

40 posts

145 months

Monday 10th July 2017
quotequote all
Simpo Two said:
Is there really a 10-fold margin on bobbins?

It might be simpler just to send the charity a donation from your own funds - and in that way you are actually donating, not just handing them other people's money...!
In this case there is. I don't have £1,000 to give unfortunately. Maybe I just cast the idea aside rather than bring on a world of complication.

Regarding handing them other people's money, the other people would get a very nice bobbin out of the exercise.

Eric Mc

125,779 posts

295 months

Monday 10th July 2017
quotequote all
AdviceHunter said:
Eric Mc said:
And would you operate as a sole trader or a limited company?
I guess I would be a sole trader. I certainly intend on opening a limited company in order to do this.
You can't do both

A sole trader runs a business in his own name

A limited company is separate to the individual.

Simpo Two

92,962 posts

295 months

Monday 10th July 2017
quotequote all
Eric, are donations to a registered charity tax deductible?

In other words:

Profit from sales: £900
Donations to charity: £900 (see attached evidence)
Net profit: £0.

Eric Mc

125,779 posts

295 months

Monday 10th July 2017
quotequote all
Simpo Two said:
Eric, are donations to a registered charity tax deductible?

In other words:

Profit from sales: £900
Donations to charity: £900 (see attached evidence)
Net profit: £0.
Generally, yes - but the company still needs to file annual returns and accounts with Companies House and HMRCs- so there will be costs incurred in just maintaining it.

If a sole trader is based abroad and is a non UK tax resident, then their profits from the business would not be subject to UK tax or NI - although they might have to pay tax in the country in which they do live and are tax resident.

AdviceHunter

Original Poster:

40 posts

145 months

Monday 10th July 2017
quotequote all
Argh! My bad... I would be a sole trader, NOT setting up a limited company. Typo from me.

Thanks for all of the information. This seems like it is getting complicated. Maybe I'll pass this one up.

Eric Mc

125,779 posts

295 months

Monday 10th July 2017
quotequote all
What's complicated?

You are a person living outside the UK.

You have stated that you are not a UK tax resident.

You want to set up a sole trading business.

Some of that business, maybe all of it, will be generated in the UK BUT the trader is not tax resident IN the UK therefore the profits are not taxable in the UK.

They are taxable in your country.

If you want to give the profits away to a charity, that is entirely up to you. In the UK, a UK tax resident who actually pays UK tax can donate money to UK charities under the Gift Aid scheme. This allows the charity to reclaim from HMRC any basic rate tax the donor may have suffered. If the UK taxpayer also pays tax at the higher tax rates, they personally can claim tax relief for those higher rate taxes paid.

As you will not have suffered any UK taxes on this income, you cannot donate any money to UK charities under the Gift Aid scheme. You MIGHT be able to get some personal tax relief on these donations based on whatever tax rules exist in your home country regarding charitable donations.

Of course, there is nothing to stop you giving whatever you like to UK charities if you want to.

Simpo Two

92,962 posts

295 months

Monday 10th July 2017
quotequote all
Or spend £100 on 100 bobbins and send them to the charity, who can then sell them for £10 each and get the money that way...

mcflurry

9,191 posts

283 months

Wednesday 12th July 2017
quotequote all
Would the "taxman" actually chase such a transaction, due to its small size and the complexity of the OP being in a different country, as well as the £1000 being donated?


Eric Mc

125,779 posts

295 months

Wednesday 12th July 2017
quotequote all
There's nothing to chase.