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 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.
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