Charity Tax Relief on Trading Profits

Charities can carry out trading activities directly related to their charitable aims and objectives, and/or can trade as a way of raising money provided it is on a small scale and presents no significant risk to the charity’s assets. 

Profits from trading activities may be taxable but there are some exemptions, including: 

• primary purpose trading 

• activities carried out by charity beneficiaries 

• small trading 

• profits from fundraising events 

• profits from charity lotteries 

If your group is not exempt, you could consider conducting all or part of your activity through a subsidiary trading company and transfer some or all profits of the company back to the charity as a donation, in which case the charity will then be able to re-claim tax.