Naive Question about selling for profit, to donate
Discussion
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.
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.
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.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...!
Regarding handing them other people's money, the other people would get a very nice bobbin out of the exercise.
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.A sole trader runs a business in his own name
A limited company is separate to the individual.
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.In other words:
Profit from sales: £900
Donations to charity: £900 (see attached evidence)
Net profit: £0.
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.
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.
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.
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