Anyone who’s involved in operating a charity knows how it differs from running a business, both in terms of motives and objectives.
HMRC treats non-profit organisations and charities very differently to businesses, offering some unique tax breaks in the process.
If a charity is recognised by the tax authority, it will benefit from certain tax reliefs as long as the funds raised are used for charitable purposes.
Charities usually pay tax when they receive income that doesn’t qualify for tax relief, or if any income has been spent on non-charitable purposes.
With unique tax breaks come unique challenges, many of which have been exacerbated by the pandemic, especially in the case of smaller charities.
The public’s generosity has been directed largely towards the UK’s major charities, including the NHS, leaving many others facing financial ruin.
There’s a reputational issue, too. More than other sectors, charities depend on public trust, and are expected to be ultra-transparent.
It only takes one example of fraud or financial mismanagement for faith in the concept of supporting the charity to be dented.
Careful accounting for charities and non-profits isn’t just nice to have – it’s vital. With that in mind, we can help you to:
• ensure finances are managed carefully and systematically
• make sure no more tax is paid than necessary
• maximise income from investments and assets
• ensure compliance.
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.