Examples of non-primary purpose trading are: The sale of Christmas cards or calendars to raise funds for the charity. The operation of a cafe bar at a theatre, is open to the general public. Tax Law implications: If a charity carries out non-primary purpose trading, it will have to pay income or corporation tax on its profits from those activities, unless the level of trade that isn’t primary purpose falls within: specific exemptions in tax law (for example a fundraising event) or the . The small-scale exemption is an exemption from corporation tax on the profits from small-scale non-primary purpose trading by charities. It applies only where all the profits or income are applied for the charity's purposes. Charity Law implications: Charities can undertake non-primary trading activities as long as is no risk to the resources of the charity. s must always act in ‘significant’ the best interests of the charity and consider whether it is appropriate to undertake the trading activity. With non-primary purpose trading it is important to consider the scale of the risk to the charity. Whether this is depends on a number of factors, such as: ‘significant’, the size of the charity the charity’s legal form the nature of the business involved in the trading the expected cost turnover projections investment required from the charity, and the likelihood of return to the charity. If the trading activity is considered to be of significant risk you should first decide if the activity should be carried out at all. If you decide it is worth the risk then you should look at establishing a separate trading subsidiary. 1.5 What doesn’t count as trading? In some cases charities can sell things without it being considered trading for tax purposes:
Examples of non-primary purpose trading are: The sale of Christmas cards or calendars to raise funds for the charity. The operation of a cafe bar at a theatre, is open to the general public. Tax Law implications: If a charity carries out non-primary purpose trading, it will have to pay income or corporation tax on its profits from those activities, unless the level of trade that isn’t primary purpose falls within: specific exemptions in tax law (for example a fundraising event) or the . The small-scale exemption is an exemption from corporation tax on the profits from small-scale non-primary purpose trading by charities. It applies only where all the profits or income are applied for the charity's purposes. Charity Law implications: Charities can undertake non-primary trading activities as long as is no ‘significant’ risk to the resources of the charity. s must always act in the best interests of the charity and consider whether it is appropriate to undertake the trading activity. With non-primary purpose trading it is important to consider the scale of the risk to the charity. Whether this is ‘significant’, depends on a number of factors, such as: the size of the charity the charity’s legal form the nature of the business involved in the trading the expected cost turnover projections investment required from the charity, and the likelihood of return to the charity. If the trading activity is considered to be of significant risk you should first decide if the activity should be carried out at all. If you decide it is worth the risk then you should look at establishing a separate trading subsidiary. 1.5 What doesn’t count as trading? In some cases charities can sell things without it being considered trading for tax purposes: