What on Earth is a Substantial Donor? 🤔
Let’s start with the basics, shall we? A substantial donor is a person who makes a sequence of generous gifts to a charity amounting to £25,000 or more in any given 12-month period or £100,000 over six years. Imagine a charity going, “Thank you, kind soul, you’ve donated more than we could ever imagine!” But, wait… there’s more. Trouble comes strolling with its usual flair when Mr. or Ms. Substantial Donor enters the room. The charity might throw a party, but the taxman isn’t too thrilled. Here’s why:
The Taxman Cometh! 💼
If said charity decides to conduct business with the generous donor – selling, buying, or letting properties, or any hanky-panky financial assistance and investments, they’re slapped with the denial of tax relief. ouch! But that’s not all – sometimes, a tax charge appears out of thin air like an uninvited guest to your well-laid party. Here’s the list of the no-no’s that charities must dodge:
- Selling property to the donor.
- Purchasing property from the donor.
- Renting property to or from the donor.
- Providing any form of financial assistance (hold those horses! 🐎).
- Any investment by the charity in the donor’s business needs to play it safe.
flowchart LR
A[Substantial Donor] -->|Gifts £25,000+ yearly or £100,000+ in six years| B[Charity]
B -->|Property Sale/Purchase| C((Taxman Gets Angry))
B -->|Property Lease/Lend| C
B -->|Financial Assistance| C
B -->|Investment in Donor's Biz| C
D[Charity Penalized]
C --> D
Let’s Break Down the Mumbo Jumbo ✨🔍
Selling Happiness, Buying Trouble
When a charity decides to sell or buy property from their much-appreciated donor, the gag reel of tax mayhem begins. The charity goes from
