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Small trading tax exemption for charities

The tax treatment of charities can be complex. Many charities trade either as part of their charitable interests or to raise funds. As a first step, any charity hoping to benefit from any beneficial tax treatment needs to be recognised as a charity for UK tax purposes by HMRC as well as meeting other criteria.

A charity will not pay tax on profits it makes from trade if:

  • they are making money to help their charity’s aims and objectives, known as ‘primary purpose trading’
  • their level of trade that is not primary purpose falls below the charity’s small trading tax exemption limit
  • they trade through a subsidiary trading company

The charity must pay tax on any other profits.

The small trading tax exemption limits are as follows:

Charity’s gross annual income Maximum permitted small trading turnover
Under £32,000 £8,000
£32,001 to £320,000 25% of your charity’s total annual turnover
Over £320,000 £80,000

If the charity’s small trading turnover is higher than the exemption limits, then they are required to pay tax on all of their profits from that trade.

Source: HM Revenue & Customs Wed, 21 Apr 2021 00:00:00 +0100

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Some accountancy websites also provide pages and pages of tax information, helpsheets, etc. We prefer to give clients personally tailored advice. So, if you want details of tax rates and allowances just go to the HMRC website on which you should find what you’re looking for. If you need more individual advice please contact us.

Below are links to websites you may find of interest, but as we like to support our local community and clients, we have included links to websites that may be of interest:

HMRC
FT
BBC
VEALE WASBROUGH VIZARDS
CESP
PRACTICE INDEX
SIMCOMM ACADEMY

More Local:
FOOTPLATE EXPERIENCE
ANGLEBURY PRESS
OFFCAMBER.CO.UK