Crowdfunding

A means of raising money for projects/businesses, often made by a large group of people. There are 4 common types:
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• Donation crowdfunding: Usually done by charities, asking people to donate money, to support a cause.
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• Reward crowdfunding: Non-financial benefits are given to those who fund projects.
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• Equity crowdfunding: Shares/stakes in a company are given in return for a contribution to the company.
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• Debt crowdfunding: Taking loans from investors.
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Depending on the type of crowdfunding, they each have different tax implications.
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• Donations: no tax relief is available, unless the project is a charity where you will be able to claim Gift Aid.
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• Rewards: no tax relief.
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• Debt: tax will be paid on earnings from P2P lending. If loan isn’t recouped, CGT Loans To Traders Relief and Social Investment Tax Relief can be used.
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• Equity: Capital gains tax will be enforced on selling shares for a profit. Dividend tax will be paid for dividend income.

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