Finance Bill 2019: increasing charities small-scale trading exemption limits


As announced in the Autumn 2018 Budget, the Finance Bill 2019 includes a measure (clause 40) to increase the small-scale trading exemption limits for charities.

This provision will amend section 528(6)(b) of the Income Tax Act 2007 and sections 482(6)(b) and (7) of the Corporation Tax Act 2010 to increase the limits on the amount of annual turnover that a charity can receive from non-charitable trading activities and be exempt from tax on the profits of such trade. The new limits are £8,000 (up from £5,000) or, if the charity’s turnover is greater than £8,000, 25% of its total incoming resources, subject to an overall upper limit of £80,000 (up from £50,000).

The new limits will come into effect on 6 April 2019 for charities subject to income tax (charitable trusts) or on 1 April 2019 for charities subject to corporation tax (all other forms of charity, including charitable companies, charitable incorporated organisations (CIOs) and charitable unincorporated associations).

This should mean that charities that engage in non-primary purpose trading marginally above the current limits no longer need to set up a wholly-owned trading company to carry on all or part of their non-primary purpose trading.

To track the progress of this measure, see Private client tax legislation tracker 2018-19: Small-scale trading exemption: limits increase. For guidance on the charities small-scale trading exemption, see Practice note, Charity tax reliefs and exemptions: overview: Small-scale trading exemption.

Source: HM Treasury and HMRC: Finance Bill 2018-19 legislation and explanatory notes (landing page with links to explanatory notes and other documents).