Political party account

Blonde Accountant

Hello, I am doing some work for a small political party, they have only recently set up and have registered at companies house. The only income is donations and monthly subscriptions, so will they have to pay corporation tax? Can anybody help please-I'm sorry if my question seems a little naïve.

Thanks for reading

Nicola

Blonde Accountant

The reason I ask is because there will in effect be a profit, as the only outgoings are a small wage, stationary etc.


Thanks

JodieR

I know that non-profit organisations don't need to pay corporation tax so long as all of their outgoings aer incurred for the organisation and any remaining profits are intended to be used to benefit the organisation. What I don't know is what a company would need to do to get this exemption - they might need to register with the charities commisson, but I don't know if political parties are entitled to do so, or if there's an alternative, or if they can just inform HMRC that they are non-profit. I did have a client who ran a nursery school and they did have to pay corporation tax until their charitable status application was approved.

Blonde Accountant

Thanks Jodie, I shall look into that

RAS

My understanding is that any profits would be subject to corporation tax. Charities are often exempt from corporation tax depending on the nature of any trading activities but I dont think this extends to other not for profit companies. Generally "not for profit" in this context means that reserves are not distributed to its members and doesnt mean that any profits are not taxed.

Not sure if there was a reason why they set up a Limited Company?

Moominyak

Political parties cannot be registered as a charity; a political party would therefore be liable for CT.

Source: Charities Commission

deanshepherd

Given the mix of answers I think you need to take careful advice here.

Is this a political party registered with the Electoral Commission i.e. seeking to put candidates forward for office? or is it an organisation with political aims i.e. a lobbying organisation?

Both are likely to be subject to corporation tax, per se, but neither may actually have any trading activities to declare income on.

I think it is quite rare for political parties to pay tax (except on investment income) as they do not normally undertake any non-mutual trading activities or, in the Labour Party's case, they have such huge financial losses that the chances of making a taxable profit are slim to none.

Blonde Accountant

I know this is a few months on, but thanks for that. Dean, they are registered with the Electoral Commssion.

Blonde Accountant

I've been looking all over the HMRC site and rang them-even got to speak to a real person-not that he could help at all. This political party isn't a dormant company, but I'm finding it incredibly hard to find out if they are liable to pay corporation tax. The income consists of donations and member subscriptions, a small amount of bank interest and sales of non profit making stickers.

I'm not sure why they were set up as a limited company, I think they were advised to do this by somebody.

Thanks