Are Paypal donations taxable?

^^ as per topic (I'm based in UK)

I think so, yep.

The strict answer is any income you recieve is taxable and you should show it in your accounts and pay the tax on it.

Certainly, if you are running a business then this is the best course of action; there are serious legal issues for not declaring income (no matter what the source).

However if you are just an individual and the donations are reasonobly small, I would say you are pretty safe to just stick it in your back pocket the chances of the revenue picking up on it and asking for the tax are quite slim unless you go and draw attention to yourself...

If your an individual and the amounts are getting big (let's say >£100) the it might be worth covering yourself and filling out a self-assessment form.

For the last two cases above I'm assuming you have an income of more than £5225 a year (which is your tax free allowance if your over 18); if you don't then you should be ok to keep the cash and not pay anything quite legitimately.

If you are getting donations for charity you don't have to pay tax as long as you register for gift-aid and get the people donating to agree.

Darkheart

yup, it is As I expected.

As from my friend's information, PayPal donates are tax-deductible in UK and some countries, in this case the tax department will count in the income donated(but I think that applies to charity only).

A donate is like give an amount of money to your friend it doesn't count as trade/earn etc in my country, but that may very depend on your countries.

For example, Google AdSense doesn't count into tax in my country, but in many countries it does, ask the local consultant if possible.

I don't live in the UK so I don't know their tax laws. But I don't know the tax laws in the US either, and neither does anyone else, so I won't let that stop me from giving you advice.

Generally, anything which is a "capital gain" ie: profit, for you, is taxable.

As far as "donations" go, I think there's a slim chance you might get in trouble for using the term "donations" as you're not registered as a on-profit organization, and the people that donated might try to claim those "donations" as a tax credit.

What you'd be getting is more of a "gift".

This page will tell you how gift taxes work in the us:
http://en.wikipedia.org/wiki/Gift_tax

Apparently you can "gift" up to $12,000 to someone, and you don't have to pay taxes on that, and they don't have to pay taxes on that, but you don't get to claim a tax deduction for the gift you gave, like you can with a "donation" to a real charity.

To be a gift though it has to be "detached and disinterested generosity". I couldn't tell you exaclty what that means, but you're probably safe if the gift isn't in exchange for something, like webspace, or artwork.




While that would have been my first guess, the wikipedia page seems to indicate otherwise. Do you pay taxes on christmas gifts you get? Neither do I. And sometimes they're scratch tickets. So I think the wikipedia article must be right.

...for example by asking the question on an internet forum.

Don't give the government ideas, you idiot!!! ; )

Sswift: nice how its over there :-)

Here in switzerland you have to pay taxes on everything. Donations, gift, lottery win ...
I'm only waiting for the O2 taxes ;-) (we already have CO2 ones, so ... )

Is there anything that isn't?

At least you don't live in the U.S., where you pay a third of your income and in return you get absolutely nothing.

Yeah, you could live in the UK and pay 50% and get "free" healthcare.

Not unless you plan on asking the Inland Revenue for special dispensation to pay more tax than everyone else you couldn't.

It's income so it's taxable!

Tack on the 17% VAT and tell me you don't pay close to 50.

No, not even close. You have to earn over £35,000 a year to pay in the 40% bracket at all. So let's pretend I earn £40,000 a year.

£2,000 is taxable at 10%. That's £200.
£33,000 is taxable at 22%. That's £7,260.
£5,000 is taxable at 40%. That's £2,000.

Let's round up and say I've paid £10,000. That's 25% of my income. In order to get up to 50%, I'd have to spend £57,000 on taxable goods and services to get to 50% total. So I'd have to be spending £17,000 more than I earn in order to achieve it.

Nope, sorry, I don't quite manage to spend that.

EDIT: Anyone who does can buy me a drink though.

In Sweden taxes pay you!!!

I thought they got rid of the "gift" thing.

council taxes can be very high in the UK if your unlucky to live in a good neighbourhood, even if your house isn't all that. The area of surrey my parents bought a house in for $140k 25 years ago required them to pay almost $5000 a year in council tax!!!.

Thats a huge ammount for a 2 bedroom house. Would pay for a brand new 2.0L ford focus in 2 years lol.

SSwift: Most people in the UK don't have to file a tax return, most tax is taken as you earn it by their employer and they have no opportunity to claim expenses, you can only do that if you are a business. As a result things that might seem logical and simple for someone in the US are different here. I'm pretty sure a UK accountant will tell you the same as me; that is unless you have a totally huge income in which case you will probably pay no tax at all, but that's another issue.

Gabriel: Don't forget you have to pay 11% of any income earned in National Insurance (what a joke) no matter how much you earn with NO threshold, making it one of the most unfair taxes. I reckon I also pay about 17% of my income in stealth taxes (TV License, Council Tax, VAT etc.).

Oh and in the UK you don't get "free healthcare", you get a basic, crappy level of care, if you want to see a specialist BEFORE you die on the waiting list then you pay for private health insurance. People in the UK have been kidding themselves for years that we have a health service that is the "best in the world", in reality the state system is pretty damn poor and if you want decent care, you have to pay, just like everywhere else, if dying from preventable diseases and conditions doesn't bother you, stick with the NHS and NICE.

Darkheart

Guns lower taxes.

I did read in one of the major newspapers a while back that the average working person in the UK spends 50% of their money on tax. This is taking into account taxes on income, expenditure, the lot.

Any money you get is taxable and has to be declared otherwise you can be stung for tax at a later date, tax evasion doesnt look good on a resume ;)

70% of the price of Petrol (Gas) in the uk is Tax too. Inflates it to almost $2 a liter (roughly US quart) we pay about $3.50 for 4 of those!!!

In New Zealand you can receive up to I think $25K in gifts before they are taxed, that includes friends helping you out with mortgages and I would assume paypal donations where there is no commercial transaction taking place.

Darkheart seems to be posting from the 1970's.

We do fill in Tax Returns in the UK nowadays. And the National Health Service is actually quite excellent for the most part.

I guess it depends how many you get, but yes I would have thought so.

You do NOT have to worry about VAT though as you are not selling anything and would be illegal anyway if you are not VAT reg. (I dont think you need to register for vat in the UK unless sales are BIG unlike other parts of EU)

@john, the NHS was probably much better in the 70s before it was run by a load of beaurocratic pencil pushers. My mum was a midwife for almost 40 years and has seen a right drop in standards, from the dismissal of matrons (who were as bossy and efficient army sergents!) to badly trained nurses not washing their hands. My mum recently needed a hip op as her hip had decayed so much one leg was shorter than the other and risked collapse that would have sent her femur shooting up into the abdomen, potentially life threatening. She still had to wait over a year to get it fixed.

We have 7.5% VAT, 1-2 month income regular taxes but anything you buy or use as extra taxes on it above VAT (petrol has 2 or 3 different taxes on it, one is the previously mentioned CO2 one, but any kind of luxury has as well at least 1 extra tax)... and we have extra costs for health care which are 1-2 month income as well and very expensive life costs (food here is several times more expensive than in the surrounding countries, flats and the like cost 500$ upward per month for 20squaremeter single room flats)
Not to mention the 10% of your income that you will never see. They are used for social stuff and your own post-work funding at least if the system then still exists (not assumed it will do so as currently 1 worker pays for one old which does not really work as 3 workers per old would be needed to make it a "no extra cost" system)


I've never tried to sum it up. Would be too frustrating to see to what all our hidden taxes actually sum up in the end or better how much money you actually have to life after you payed the pure minimum to be able to survive ... I know that I am in the reds each year as student, no way earning even the pure minimum costs for me even with freelance programming and 1 day per week working.

John, I said most people don't fill in Tax Returns which is true, the vast majority of people are simply PAYE employees.

I think the your experiences of the NHS more or less defines how you think about it. A couple of years ago I had a major health scare which effected me an my brother. I was fortunate enough to have private health insurance and my brother didn't. When your waiting to find out if you have a terminal disease; fighting your way through the system just to get an appointment which is then delayed and delayed again is no fun, particularly when it's repeated over and over again. I think once you see how things could work compared to how they do for most people you change your attitude.

Darkheart

In the UK you can receive up to something like 15K in gifts tax-free per year. The question is whether these donations count as gifts.

Ring the tax office.

Redeclare it as support gift ;-)

If people could see how much tax they are really paying we would probably have an armed revolution.

Many of the taxes are out of your sight. In the U.S. we have Social Security and Medicare ( payroll taxes ). Supposedly you pay half and your employer pays half. Of course the employer's share is money he must pay to have you as an employee, so it is really coming out of your paycheck. But the point is that this is taken out of your pay before you ever see it. If you are self employed you pay both halves.

I also dimly recall a situation in which a utility company ( electric? ) responded to complaints about high prices by itemizing the multitude of taxes on your bill. The local legislature sprang into action and made it illegal for the utility company to display this information.

Really? That settles it, I'm moving to the UK!

This is an interesting myth perpetuated by oil companies. Crude oil is about 90 USD a barrel. Each barrel refines to about 75 liters of gasoline. That means that if your 70% tax is accurate, BP has a net loss of 4 cents for each liter of petrol you buy in the UK? I don't think so. I realize this is somewhat simplified, because there are other byproducts of the refinement process that can be used to further push the profit margin. But the idea that BP is selling gasoline at a net loss seems somewhat naive.

Why? If we didn't have to pay any taxes, we wouldn't have as high salaries. The fact of taxes is that it costs x amount of money to run a society, and there's only we the people to pay it.

How much is x and what do we get for our money?

Check out the following amazing graph from the U.S. Department of Education web site. Observe the whopping increase in spending from 1990 to 2000. It more than triples in a decade, far beyond the rate of inflation. The roughly horizontal red line shows the results. It doesn't look to me like those billions of dollars were very cost effective.

And can anyone explain what message the Department of Education is trying to convey with this graph. I'm pretty sure they want more funding, but this doesn't seem like a very good sales pitch.

That's cleared that one up, then.

The answer to your original question was always clear: Don't ask for legal advice here and don't take any such advice seriously. You might as well ask what medication you should take.

:D

Is there any country in the world where not all sorts of income are taxable?

In Germany, even stolen(!) money is taxable, because our tax laws do not judge where the money comes from. The same is true for illegal drug sales, pimping prostitutes or whatever else you can think of. You have an income, you have to pay taxes for it. That always includes gifts, donations or inheritance.

That is why L. Ron Hubbard founded Scientology: "If you want to operate tax free, you have to found a church."

Well that's up to the politicians you elect.

I didn't say they were. I said it costs 'x' amount of money to run the country, and there's only the citizens to pay for it. The only difference is in which groups you chose to tax.

Sure, same in the US. But chances are that since you've already committed one or more felonies, tax evasion probably isn't something you're going to lose much sleep over.

Surely any monies accrued from criminal activities are confiscated enirely?

Flameduck, sure, once you've done the other things, you won't lose sleep over tax evasion. The interesting aspect about it is that the penalties for tax evasion are in many cases higher than those for the felonies you committed to get the money.

They finally nailed Al Capone for income tax evasion.
http://www.chicagohs.org/history/capone.html