Last updated: 14 October 2026
Is money given towards your business repair costs a personal gift or taxable income?
It depends on why it was given. If friends, family or the public give money to you personally, out of goodwill and not in return for anything from the business, it’s usually a personal gift and not taxable. If the money is given to the business, or is linked to its trade, such as customer donations, crowdfunding with rewards or insurance payouts, it’s normally taxable trading income. Money received to repair business assets is usually income that matches the deductible repair cost.
How HMRC looks at it
| Source of money | Usual treatment |
| Personal gift from family to you, unrelated to the business | Not taxable |
| Donations from customers to help the business reopen | Taxable trading income |
| Reward-based crowdfunding (e.g. vouchers, products) | Taxable trading income; VAT may apply |
| Insurance payout for repair costs | Taxable, but offset by the deductible repair cost |
| Grant from a council or charity | Usually taxable income |
| Equity crowdfunding (shares issued) | Capital, not income |
The test
HMRC and the courts ask whether the payment was made to you because of your trade. Payments from customers or the community because they value your business are usually linked to the trade, even if voluntary. A gift from your parents to help you personally is not.
Example
Rosa’s café floods in 2026. Her regular customers raise £6,000 on a crowdfunding site to help her reopen, with no rewards offered. She spends £8,000 on repairs. The £6,000 is likely to be trading income, because it was given to support her business. The £8,000 repair costs are deductible, so overall she has a loss of £2,000 from the incident. Her sister also gives her £2,000 personally, which isn’t taxable.
Repairs vs improvements
Repair costs that restore assets to their previous condition are deductible. If you use the money to improve the premises, such as a new extension, the cost is capital.
VAT
If you’re VAT registered, donations with nothing in return are outside the scope of VAT. Reward-based crowdfunding, where backers receive goods or services, is usually subject to VAT.
Inheritance tax for the giver
A personal gift may count for inheritance tax if the giver dies within 7 years, unless it’s covered by exemptions such as the £3,000 annual exemption.
Keeping records
- Record where each payment came from and why it was given
- Keep crowdfunding statements and messages from donors
- Keep insurance correspondence and repair invoices
Common mistakes
- Leaving customer donations out of the accounts because they felt like gifts
- Claiming the repair costs but not declaring the insurance payout
- Charging no VAT on reward-based crowdfunding
- Treating money given to a limited company as a personal gift to the director
If you are unsure, disclose the payment on your return with a short note explaining your view, as this protects you against penalties if HMRC disagrees.
Frequently asked questions
Does it matter if the money was paid into my personal account?
Not really; HMRC looks at the reason for the payment.
Are Covid-style support grants taxable?
Yes, most business grants are taxable.
Is GoFundMe money taxable?
If it’s for your business, usually yes.
Can a company receive a gift tax-free?
Rarely, as payments to companies are usually linked to the trade.
Related: VAT on coronavirus grants, insurance costs for companies and declaring cash gifts from an employer.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with business income and gifts. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
