The short version: Crowdfunding is raising money from lots of people, usually through online platforms. It’s popular for starting businesses, funding creative projects, or supporting causes.
Types of crowdfunding
Donation crowdfunding is where people give money without expecting anything back. Often used by charities.
Reward crowdfunding is where backers get something in return, like early access to a product or a thank you gift.
Equity crowdfunding is where people invest in exchange for shares in your business. They’re betting on your success.
Peer to peer lending is where people lend you money and expect to be repaid with interest.
What about tax?
Donations to registered charities can qualify for Gift Aid. Rewards are usually treated as advance sales. Equity investments might qualify for tax relief schemes like EIS or SEIS. Interest from peer to peer lending is taxable like savings interest.
Raised money through crowdfunding and not sure how it affects your taxes? Let us help you understand the implications.
