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Changes to charity tax relief thresholds (2): Trading

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Charities with total turnover above £200,000 can undertake non-primary purpose trading of income up to £50,000 and benefit from tax exemption (trading towards their primary charitable purpose can be at any level). For charities whose total income is below £200,000, there is a scale of lower trading exemption limits.

The small trading thresholds, which haven’t moved for 20 years, will be revised upwards in April 2019, effectively allowing charities to undertake more trading activity before a trading subsidiary is needed. The new limits for non-primary purpose trading income will be:

For income below £32k: limit at £8k

For income £32k to £320k: limit at 25% of income

For income over £320k: limit at £80,000

Remember, of course, that subsidiaries aren’t set up just to prevent tax in a charity. The decision on whether or not to run operations in a subsidiary often requires assessment of other factors including risk management, VAT, business rates exemptions and cost of administration.

Giles Kerkham

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If you have any questions or if you’d like to discuss this with us in more detail, please speak to your usual Larking Gowen contact or call 0330 024 0888 or email


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