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Posted Mon, 22 Jul 2024 09:11:10 GMT by ddawood
I have created a product that I am selling to raise money for charity (I do not have a registered business). I have set up a website/store online for sales and aim to make more than £1,000. I have spent around £800 that I want to get back, and all money made after that will be donated to a specific registered charity. Will I have to pay tax on the sales of the items or if this will be tax free because I am donating the entire amount to charity? The gov website is not very clear about this, it just says donations to charity are tax free – but my situation feels different because of the fact that I am selling goods. Technically, I will be making more money than I spent, which is regarded as profit, but if I give it all to charity surely this ceases to be considered profit? I would like to know if I will be taxed and if I need to complete a self-assessment to declare the money made even if I give it away as a charitable donation.
Posted Wed, 24 Jul 2024 11:22:38 GMT by HMRC Admin 21 Response
Hi ddawood,
As you are trading, you would potentially be liable to pay tax on the net profits.  What you choose to do with those net profits afterwards, is up to you.  If your gross profit exceeds £1000, you will need to register for self assessment and report the turnover and expenses.  If tax is payable on the profits you give to charity, you can claim tax relief by declaring the gifts to charity in box 5 of page TR4 of SA100.  The charity can then claim tax relief on the charity payment from HMRC, thus receiving the tax you paid on the profit as well.
Thank you.

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