Charities need help and support
A sole trader or a partner may do some voluntary work for a charity and may even provide materials. You may have done so, or know someone who has.
If it is voluntary work, it doesn’t always mean that the cost of the materials can be treated as a tax deductible expense. Some HMRC inspectors will argue that the purchase of materials wasn’t for business purposes.
You could argue the point with the HMRC inspector – and you are likely to win – eventually, but there would be time and effort involved. There is probably a better way.
Don’t do the work or supply the materials voluntarily. Agree with the charity that you will invoice them and they will pay your invoice.
You can then donate the money back to them under Gift Aid.
Gift Aid it
By giving them the money back under Gift Aid, the charity can claim Gift Aid tax relief which means that HMRC will pay them 25% of your donation. The charity possibly receives 25% more and, if you are a higher rate taxpayer, you could receive a little extra tax relief.
If you are VAT registered, it may not be quite so straightforward because the charity can’t reclaim the VAT and you have to pay it, so you can only, safely, donate the net amount. The charity won’t be quite as well off, but won’t lose.
Different rules apply to Ltd companies carrying out voluntary work.
For help with tax and VAT, we are the people to call. Whatever your query, give us a call (01509 816150) or complete the enquiry form below.