Will Tax Be Paid on All Income From My Crowdfunding Campaign?
Crowdfunding is about receiving donations from many people, which means that you might consider it to be free of tax but that is not always the case.
Although investigations into this by HMRC are thin on the ground, there is a risk that HMRC might consider these donations to be business income.
Despite this, should the money generated from crowdfunding meet the criteria of a donation, then it might not be susceptible to VAT. However, it will still be considered a business income. So, you will need to include this income within your sales. What this means is that you’ll need to pay personal tax or corporation tax on all increased profits. If this income is considered a business income then you’ll need to consider VAT too.
Will VAT Be Paid on My Crowdfunding Income?
If those who are making a donation have been offered a reward for their donations, then this is classed as an advance payment. So, if you are VAT registered, it could mean that this income might be susceptible to VAT. If you are not classed as VAT registered then this will be included within your VAT threshold, which is £85k.
