Tax matter on Donations
Tax matter on Donations
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drivin_me_nuts

Original Poster:

17,949 posts

241 months

Monday 7th April 2008
quotequote all
Quick question for those who might be in the know.

I am looking into the idea of setting up a research project soon in collaboration with the local NHS trust and other research bodies. Now potentially this could be funded research though traditional grant/funding methods though I am also looking for financial donations from relevant peoples and other bodies.

My question is this: If I receive monies as donations to a Ltd company for means like this - is it treated as normal Income? Apart from charity or trust status is there any way that I get to keep all the monies received and not have to squander peoples positive intentions on some chancellors petty bauble? I plan to take no income/costs/deductions from the donations - in fact nothing at all as the rest of my business will cover the costs and 100% can go to research.

Any ideas what can be done?

Eric Mc

125,796 posts

295 months

Monday 7th April 2008
quotequote all
In the normal course of events, grants received for research and development will be deducted from the cost of that research and development. Consequently, whatever tax relief you will be entitled to on the research and development expenditure will be decreased pro-rata by the level of grants received.

If you could arrange that the project be set up as some form of charitable trust - then you might be able to ensure that any moneys made by the project are tax exempt.

If that was the case, you might have to consider "ring fencing" this particular activity and isolating it from your current trading activity. If you just lump it into your current limited company it may be difficult to prove that it is a separate and distinct activity from your normal trade.

drivin_me_nuts

Original Poster:

17,949 posts

241 months

Monday 7th April 2008
quotequote all
Charity/trust looks to be the way to go then. This is an area new to me and I'll need to talk to my Accountant about it.

Thanks for the advice.