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Revolution in finance

24 February 2015 / Mike Hayes
Issue: 4490 / Categories: Comment & Analysis , Admin , Compliance , Income Tax , Investments , Venture capital
hayes

A tax guide to crowdfunding

KEY POINTS

  • Crowdfunding as a means of raising finance is doubling every 60 days globally.
  • Donations to fund business are likely to be subject to income or corporation tax.
  • Care should be taken if a donors are given rewards.
  • Advantages of peer to peer lending such as social investment tax relief.

The use of crowdfunding a word coined in 2006 to describe the method of raising capital through the collective efforts of friends family members customers and individual investors is increasing at such a rate that globally it appears to be doubling every 60 days.

Designed to raise small sums from lots of supporters rather than large investments from a few investors crowdfunding is often achieved through social media or designated platforms.

There are three types of...

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