Crowd funding has created a stir over the past couple of years. It is growing significantly in popularity with the business community and has the backing of the Government, however no particular tax rules have been set in relation to it. Here’s a brief guide to how each form of crowdfunding affects your tax position:
Loans and shares - Where crowdfunding is in the form of a loan, or shares are offered in return, the money you receive isn’t taxable.
Donations where something is given in return – This is almost certainly a taxable arrangement. You need to remember that VAT would also apply.
Donations with nothing given in return – This scenario is far from clear cut but you could argue that this is not a taxable situation as there is no trading relationship in place. However you should seek guidance from HMRC.
We have experience of working a significant number of successful crowdfunding projects. For advice on how it can help your business call us on 0114 267 0911 or email email@example.com