Give something back via your company

Fundraising events, such as balls and dinner dances, are an increasingly popular way of raising funds for charity. We are seeing more and more profit making companies organising and running such events as their way of giving something back. However, there are a number of considerations that should be made ahead of hosting such an event and planning in advance can be well worthwhile.

VAT

Sales of tickets for the event and sales of merchandise are standard rated for VAT. This means if your company is VAT registered, you will have to pay over VAT on the ticket sales.  If your company isn’t VAT registered then VAT doesn’t need to be paid over, however, it is possible that fundraising event ticket sales could push the company over the VAT registration threshold, so this should be carefully considered ahead of planning any such events.

There are VAT fundraising exemptions available but certain criteria must be met in order to be eligible for these exemptions. This is a significant area for consideration so we would recommend speaking to us and getting advice ahead of planning an event to ensure it is structured in a way that will maximise the amount of donations passed onto the charity.

Bookkeeping

It must be ensured that the funds paid out and received regarding the fundraising events are separated out from the usual business activities of the company in your company’s books. If you are already using cloud accounting software, it will be a simple step to separate out the fundraising transactions. If you’re not already using cloud accounting software, we can help to advise which package is most appropriate for your company.

Tax

Donations made to a charity by a company are allowable for corporation tax purposes meaning the company doesn’t pay tax on the portion of its profits that it has donated to charity. If the company or a connected person receives a benefit from the donation then there is a cap on the tax relief the company can claim.

There are various VAT, tax and bookkeeping implications of running a fundraising event and these are specific to the circumstances of each company. We have advised a number of clients recently in this area, and have found it is worthwhile to be proactive and discuss any planning opportunities and potential pitfalls at the planning stages of the event.

So if you are planning on holding such an event please get in touch on 01228 530913 – It is much easier to plan ahead than to plan with hindsight.

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