CIC Association

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Accounts Group

For any accounting related queries, including accounts software package questions, grants and trading income treatment, HMRC or Companies House queries/issues, tax reliefs for CICs, links to useful finance information etc

Members: 153
Latest Activity: Jun 14

Discussion Forum

Minimising Corporation Tax - again! their grant in the first 3 Replies

Hello allMy pro-bono CIC client incurred capital spend in their first year when all income was grant funded. They didn't spend all the grant so I used your helpful tip elsewhere to take only the…Continue

Tags: Capital Allowances, CIC, CT600

Started by Paul Johnson. Last reply by Paul Johnson May 17.

Pay, national insurance tax etc. 1 Reply

Really new to all of this so sorry if this all seems obvious. How do i set up paying the directors and how do i set wages. Is it better to set wages low for the first year and the raise them or have…Continue

Started by Brendan. Last reply by Alastair Irvine May 13.

Are Grants Taxable? Am I Trading? 3 Replies

not necessarily. Its complex. Some general principles:- A Grant will start out life as being a taxable receipt of a CIC. Unless you can think of a clever wheeze it will remain taxable. This is the…Continue

Tags: grants, trading, tax

Started by Alastair Irvine. Last reply by Paul Johnson May 13.

Donations and turnover 4 Replies

Canvassing for opinion - aware that donations to CIC's are liable to corporation tax but would a donation to a CIC be subject to VAT.  Opinion given to us suggests that is counted as such but I…Continue

Started by Rachel Gardiner-Hill. Last reply by Rachel Gardiner-Hill Mar 16.

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Comment by Heidi Fisher on November 25, 2015 at 11:52

Hi Rachel,

Yes Adrian is right about being able to defer grant income to future periods if the expenditure is going to be in the following period.  In terms of corporation tax the rate is 20%.  If you have purchased capital assets then you can claim capital allowances which would reduce the amount of corporation tax due.  The regulator would not be expecting you to show a loss or break even position - this is a misconception around CICs - CICs should be making a profit - otherwise you are always struggling financially and will never have any reserves.  There is a balance to be had between spending the money to reduce your profits and therefore pay less corporation tax, and building up your reserves (which would involve paying more corporation tax) in order to provide some security if you have a drop in income in the future or have unexpected costs.  

The whole point of a CIC is to make profits/surpluses and to use those profits to benefit the community.  This is the key difference between a CIC and a normal limited company - the use of the profits you generate.  

Comment by Rachel Gardiner-Hill on November 24, 2015 at 22:00

Thanks Adrian that's really helpful.

Rachel

Comment by Adrian Ashton on November 24, 2015 at 21:32

corporation tax applies to all declared profits - however, if you're planning on using surpluses to reinvest against costs that you know will be being incurred in the coming financial year, then your accountant should be able to help you present the accounts in this way accordingly on an accruals basis...?

(however, am sure there are proper accounts here that can phrase that far more properly than I can - hopefully Heidi Harris can best advise as she specialises in CIC accounts)

Comment by Rachel Gardiner-Hill on November 24, 2015 at 20:32

Can anyone clarify the situation re CIC's and corporation tax, I absolutely get it that we have to pay it if we generate a profit.  The reason I ask this is because it is likely we will reach our year end with a small surplus that it feels prudent to hold as we may have to move premises next year.  However the impression I get from our accountant is that the regulator would expect that we would only be breaking even or making a loss?

Having always worked in the charity sector I am finding this tension in the CIC model between holding funds and having to spend them pronto before the year end quite difficult.

Also can anyone clarify what rate of corporation tax any surplus might generate, I am talking small here £2k or less.  

Thanks.  Rachel

Comment by Rachel Gardiner-Hill on April 20, 2015 at 13:50

Thanks John I thought that might be the case.

Comment by John Mulkerrin on April 15, 2015 at 15:54

Hi Rachel

You cant get both!

Comment by Rachel Gardiner-Hill on April 15, 2015 at 10:46

Has anyone had any success in securing discretionary rate relief from their rating authority as well as small business rate relief?

Comment by Dick Maule FCA on September 16, 2014 at 19:00

Naresh just got in touch, I am Bristol based, [Picton Street], welcome to email me on Dicmaule@yahoo.com if you want to talk further

Comment by Hazel Plastow on September 16, 2014 at 10:00

Hi - first post and just starting out having set up a CIC with 4 Directors (unpaid as yet) and starting to apply for grants.  I wonder if someone could advise: I understand that as Directors we can undertake work for the CIC under PAYE, but is there also the option of doing the work on commission on a self-employed basis - from my initial trawl on the web I gather this may not be acceptable to HMRC.  Many thanks, Hazel

Comment by Subrata Saha on September 3, 2014 at 9:26

a)I was wondering whether  a Director in a CIC ( limited by guarantee) not earn any remuneration from their CIC , would they need to submit Self Assessment report to HMRC? b) If a Director earn any amount even less than  £500 from their own CIC and have outside employed job, I am very much sure they need to submit self Assessment report to HMRC?  regarding income?

 

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