Hello, I’m Louise from Performance Accountancy. I want to talk about charity concerts, because this is one of those areas where good intentions can accidentally create tax confusion.

Before anyone panics, I am not anti-charity. I am very much pro-clarity.

Here is the tax issue. If you organise a concert and sell tickets, that ticket income is your business income. Even if you later donate the proceeds to charity, the donation does not normally reduce your trading profit in the same way as an ordinary business expense.

Charitable giving is dealt with separately on your tax return. It does not work like a normal business expense that simply cancels out the income.

This means you could run a charity concert, put all the ticket income through your business account, donate the proceeds to charity and assume it all cancels out. Unfortunately, it does not necessarily work like that.

The result can be a higher business turnover with no matching allowable business expense. That can distort your accounts and, in some cases, push you into higher tax bands or other thresholds unexpectedly.

The cleaner way to deal with charity events is often to keep the business and charity elements separate from the start. If you are hiring a venue, printing music, paying accompanists or incurring other costs as part of your own business activity, those may be business costs.

However, if the audience is donating directly to charity, it may be better to structure the event so that the donation money does not flow through your business account at all.

The important word here is clarity. Clarity avoids distortion, and distortion creates tax headaches. It is always better to plan the structure before the event than to untangle it afterwards.

Please ask for advice before running a charity concert through your business account, especially if the sums involved are significant or if you are close to a tax or Making Tax Digital threshold.