As of January, your charity tax return has changed, but you may wonder what the difference is.
Well, the Charity Commission has added additional questions on your income to the standard return – meaning you may have to spend more time ensuring you include everything for your next deadline.
Granted, this will vary depending on the type of charity you’re running, so it’s important to know what will apply to you.
As mentioned above, the Charity Commission has added extra questions to the standard tax return, ten of which are compulsory and the other 16 depend on your charity type.
This won’t be a permanent measure, as the Commission will remove six questions as of 2024.
So, what new questions may your charity have to answer on your upcoming tax return?
Your charity will need to report its income, even if it’s under £500,000. This will include recording donations or legacy payments, income from charitable activities, trading or investment income.
If your charity has an income over £100,000, you must also report the highest donation from a corporate and individual donor. If the two are related, you will also need to disclose this.
One of the new questions will ask you to include any payments you make to your trustees (or connected entity) throughout your accounting period. These payments could be for goods, services or “out-of-pocket” expenses.
Similar to trustee payments, you will now have to include any payments on your balance sheets to employees, including how many staff you have on fixed payments.
You will also have to include how many of them are self-employed, if any of them work outside of the UK, and an estimated count of volunteers who carry out work on your charity’s behalf.
If appropriate, you must disclose any DBS checks for relevant roles.
The new return criteria will ask you to confirm your registered address and check to see if your charity’s headquarters are the same. If not, you’ll have to disclose your new address.
Structure and governance
Your charity will now be asked whether it’s part of a wider group or acts as a subsidiary. Not only that, but you will also have to confirm a list of financial policies and procedures. These include the following:
- internal financial functions and control
- financial reserve procedures
- internal risk management policies
- safeguarding policies
- investing funds procedures.
A full list of the new criteria can be found on the Government website.
Income from outside the UK
If you receive income from outside the country, you will have to disclose the reason and the payment’s originating country.
These payments could be from other Governments, individuals or companies for memberships or donations. If you receive any income from cryptocurrency, this must also be included in your return.
Are you prepared?
With the numerous additions to your charity’s tax return, you’ll need to make sure you have everything recorded so that, when the time comes, you have all of the necessary figures.
Even if it’s just for this year, we always recommend keeping a tight database of financial information. We help plenty of our charity clients do just this, so we can help you too. Remember, compliance is key.
Get in touch to discuss your charity tax return.