11 Key Steps for Trustees, 1 Giant Leap for Your Charity – Month 6
This month we are looking at charities, trading and tax.
Charities are associated with giving, but most also actively trade. In fact, the sector gains twice as much income from trading as it does from donations.
For businesses, trading means exposure to tax. Charities have no general exemption from tax and pay some taxes at the same rate as businesses. However, there are specific measures that reduce the burden, especially for tax on profits (corporation tax).
It is important for trustees to understand the tax position of their charity so that trading is lawful. The correct steps should be taken to ensure that the right structures are in place to achieve efficient tax compliance.
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