PayPal & UK Tax Law

[SJ McAbney]

Firstly, I'm talking about UK tax laws (those things that take us for all we've got):

When you use PayPal (or a similar scheme) on a site for donations, can I assume that as it is not classed as earnings and is therefore exempt from tax?

[Anne Troy]

The account is in my name.
PayPal doesn't provide earnings statements (tho I believe they did in the past).
I know diddly about UK law, of course. Except that you have to spell funny.
:dunno

[Adaytay]

I dunno. I'm in the UK.

I beleive the donation has to be made to a registered UK charity to be exempt... not sure on that though...

Ad

[mark007]

As far as I'm aware it's up to the reciever to declare it not the sender. In the same way that when you donate to a registered charity the charity has to claim the tax back rather than the donater.

I'm a pensions expert rather than a tax expert though so I can't say anything for sure especially with the added twist of the international issue!

:)


I dunno. I'm in the UK.

I beleive the donation has to be made to a registered UK charity to be exempt... not sure on that though...

Ad

[Anne Troy]

Well...since the owner happens to say color and not colour, what are we worried about?

Hee hee...

Bottom line: Show no income; spend it all on advertising or development.

[Richie(UK)]

Hi Abulafia,

Are you talking about things from your perspective or that of VBAExpress?

If VBAExpress were a UK charity you could consider Gift Aid and Charitable Deeds of Covenant and make the necessary entries on your annual tax return. However, as far as you are concerned if you make a donation to a non-UK registered charity (and VBAExpress is neither based in the UK nor is it a registered charity) that's it. There are no tax implications for you.

VBAExpress is centrally managed in the USA. Any tax consequences will be for the owners to determine with the USA federal authorities (IRS) - there are no UK tax implications.

Is this what you wanted to know or are you setting up your own site in the UK?

[Zack Barresse]

well, in the US it's not actually the IRS that acts as an authority. you will need to send in a form 990 (990-EZ) if at anytime the budget exceeds $25,000. this is strictly for 'Not for profit organizations'.

however we'll probably (if you're wanting technical non-profit status) need to file for said status through the DOJ - Department of Justice. they handle all of that information. they also require a, survey of sorts, to be completed every year. i don't remember the name of it, but i can find out. they typically send it to you by March 20th and require it back by April 1st.

i've run our fire departments non-profit organization (Fire Fighter's Association - fund raisers and stuff) for the last 3 years, and that's about it as far as i know.

oh, and if your budget (net assets) does go over $25k, it's like a $20 processing fee.

[SJ McAbney]

Is this what you wanted to know or are you setting up your own site in the UK?I have my own site (currently just a forum at Talk History (http://www.talk-history.com/)) but I'm looking to build a large historical encyclopaedia with it and to produce regular features of historical content.

Of course, once it's properly taken off, I feel that donations to the site would be an incentive to produce regular entries to the encyclopaedia and would help to fund the purchase of books - as reference material - to advance the site's information. Or, in a less idealistic world, help pay for the site on a monthly basis.

[XL-Dennis]

Hi all,

Just to give You a broader perspective of tax & vat :)

In Sweden companies who donate money to whatsoever pay VAT 20 % (add on 25 % on the amount) and about 30 % in tax. So a donation of US$ 10 will actually end up to be US$ 15.5.

For the receivers, especially non-profitable organizations, the total amount goes directly to its purpose, i e US$10.

Kind regards,
Dennis

[Richie(UK)]

I have my own site ... I feel that donations to the site would be an incentive ... would help to fund the purchase of books ... help pay for the site

OK, if you were able to achieve recognition as a charity then any income/donations would be tax-free (assuming they are used for the charitable purpose that is the main objective of the charity).

Let's assume that you won't achieve charitable status. The Inland Revenue will look at what you are doing and determine whether you are trading. If you are trading then you will be assessed to Income Tax on any profits that you make from your trade. There are a number of so-called 'badges of trade' that the Revenue will look at in determining your trading status. None of them are conclusive in their right but they serve to build an overall picture.

One of the key factors (or badges) is the presence of a 'profit motive'. Why are you running the site? Is it simply a hobby or do you actually want to try and make money from it? If your costs outweigh any income then the chances are its a hobby - you are financing it because it gives you enjoyment. If you are actually making money then its likely that its a trade. The Revenue will not wish to treat a hobby as a trade because they will then have to allow you relief for any losses that you incur.

In summary, I do not believe that in your case you will be treated as trading. If you want complete peace of mind then you could set out your circumstances in a letter to your local Revenue office and ask for a ruling.

HTH

[SJ McAbney]

Thanks, Richie. I'll compose such a letter when the time comes.