Tax reliefs for charities

As a charity you do not pay tax on most of your income and gains if you use it for charitable purposes - this is known as ‘charitable expenditure’. This includes tax: on donations on profits from trading on rental or investment income, for example bank interest on profits when you sell or ‘ dispose of’ an asset, like property or shares when you buy property To get tax relief you must be recognised by HM Revenue and Customs ( HMRC ). Community amateur sports clubs (CASCs) get different tax reliefs . When you do pay tax Charities pay tax on: dividends received from UK companies before 6 April 2016 profits from developing land or property purchases - but there are special VAT rules for charities Charities pay business rates on non-domestic buildings, but they get an 80% discount . You must pay tax on any money you do not use for charitable purposes. This is known as ‘non-charitable expenditure’. Pay tax You must complete a tax return if your charity needs to pay tax or if HMRC asks you to. Reclaim tax You can claim back tax that’s been deducted, for example on: donations (this is known as Gift Aid ) bank interest

Get recognition for tax relief

To get tax relief your charity must be: based in the UK established for charitable purposes only registered with the Charity Commission or another regulator, if this applies to you run by ‘fit and proper persons’ recognised by HM Revenue and Customs ( HMRC ) Charities based in the EU, Iceland, Liechtenstein or Norway can no longer apply to get tax relief. If you got tax relief on or before 14 March 2023, you will continue to get it until April 2024. Register your charity’s details to get recognition from HMRC Register your charity’s details using HMRC ’s online service.

If you receive income with tax deducted, for example donations you can claim Gift Aid on, you can claim it back: online, using the Charities Online service through software that works with Charities Online by post, using form ChR1 - call the helpline to order it Bank interest You can arrange to receive interest without tax deducted. Show your bank your letter of recognition from HM Revenue and Customs ( HMRC ). If tax has already been taken from your interest you can claim it back for: the current tax year by asking your bank previous tax years by claiming it from HMRC

If your charity has income that does not qualify for tax relief you must complete a tax return. If you have no tax to pay, complete a tax return only if HM Revenue and Customs ( HMRC ) asks you to. If your charity’s income is over £10,000 you must submit an annual return to the Charity Commission . Company Tax Returns Complete a Company Tax Return if your charity is a limited company or unincorporated association . Include the supplementary pages for charities and community amateur sports clubs ( CASCs ). A charity is a limited company if it was set up by a: constitution memorandum and articles of association royal charter or Act of Parliament Limited companies must also send annual accounts to Companies House. Trusts Complete a Trust and Estate Self Assessment tax return if your charity is a trust. A charity is a trust if it was set up by a trust deed or will. Penalties and deadlines You must complete a tax return when HMRC asks you to, even if no tax is due. You may have to pay a penalty if your tax return is late or you do not complete one when you should. The deadline depends on whether you complete a Company Tax Return or a Self Assessment tax return .

Charities and tax

Overview

As a charity you can get certain tax reliefs. To benefit you must be recognised by HM Revenue and Customs (HMRC).

Charities do not pay tax on most types of income as long as they use the money for charitable purposes.

You can claim back tax that’s been deducted, for example on bank interest and donations (this is known as Gift Aid).

This guide is also available in Welsh (Cymraeg).

When you need to pay tax

Your charity may need to pay tax if you’ve:

received income that does not qualify for tax relief
spent any of your income on non-charitable purposes

You need to complete a tax return if your charity has tax to pay.

Community amateur sports clubs (CASCs) get different tax reliefs.

View a printable version of the whole guide

Charities and tax

Overview

When you need to pay tax

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Charities and tax

Overview

When you need to pay tax

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