Advice on VAT, tax and PAYE for charities

There is a general misconception that charities are exempt from income tax, corporation tax and VAT and other taxes. However, this is not always the case!

For more specific details on trading by charities see ‘Trading by Charities’

Income tax and corporation tax

Provided that certain conditions are met, many of the activities of charities are exempt from income and corporation tax, and this can be true even of large scale trading activities. This is only true, however, if the correct legal structures are put in place, and are properly managed and correct procedures are followed. Care has to be taken that the steps that are taken for taxation purposes do not compromise the charitable status.

VAT

VAT for charities can be a complex area where we are able to provide specialist advice. The understanding of the classification of different sources of income for VAT purposes and how this impacts on a charity’s VAT position is an area where we have been able to make significant savings for our clients.

There are a number of VAT exemptions and reliefs available, for example for the sale of donated goods, or VAT on rents of properties, on expenditure on refurbishments and so on. There are also reliefs available on VAT on heat and light.

Unified Business Rates & Climate levy charges

There is mandatory relief of up to 80% from business rates, and a further 20% discretionary relief. Charities are exempt from the climate levy charge on heat and light, but often have to fight to obtain the exemption.

The advice we can offer

Complexity is the name of the game in this area, and often the authorities are ignorant of the application of the reliefs, and so charities are often taxed by default.

We can advise and assist on specific problems as they arise from time to time. We can also undertake a taxation health check to see that all the exemptions available are being claimed, or that there are no circumstances arising that might unwittingly give rise to a tax charge.

We can offer detailed strategic and tactical advice on how to structure trading operations to ensure that unwelcome taxation bills do not arise. see ‘Trading by Charities’

As members of the AVN network of accountants, we are a part of the National Campaign (http://www.thenationalcampaign.co.uk), whereby members have committed themselves to giving away £20 million pounds worth of professional services to UK business and the voluntary sector, in the form of discounted professional services. Many services that we provide will reflect a discount representing our contribution to the National Campaign.

As with all our services, our fees are highly competitive. Our offices are set in a rural location, and therefore we have low premises overheads. This means that we are able to offer the highest quality services, very often at the lowest price.

For further information, please email info@sorpaid.com or complete our Enquiry Form