Charities—tax

Charities—tax

Charities are given favourable treatment when it comes to personal and capital taxes. Each tax will have its own requirements which must be satisfied in order for favourable tax treatment to apply.

Tax treatment of a charity

Charities are not exempt from tax, but they do benefit from a number of specific tax reliefs. A charity does not need to be registered with the Charity Commission to qualify for tax relief. However, before a charity can take advantage of these tax reliefs and make tax repayment claims, it needs to be formally recognised by HMRC as charitable.

Most income and gains received by charities are exempt from income tax, capital gains tax (CGT) and corporation tax.

However, charity tax exemptions are restricted by anti-avoidance provisions, such as in the case where a charity's income and gains are not applied solely for charitable purposes.

See Practice Note: Tax treatment of a charity.

Tax compliance for charities

A charity must complete and submit tax returns in certain specific circumstances, such as if served with a notice requiring it to file a return or if it has taxable income, gains

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