Not for Profit

The Charities Bill received Royal Assent on 24 February 2022 and has been brought into law as the Charities Act 2022.

Giles Kerkham explains how the measures announced in the Autumn Budget 2021 will impact charities and not-for-profit organisations.

HMRC has confirmed that Gift Aid can be claimed on Waived Refunds and Loan Repayments, and that this can be applied retrospectively.

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).

Charities are associated with giving, but most also actively trade. Charities have no general exemption from tax and pay some taxes at the same rate as businesses. However, there are specific measures that reduce the burden, especially for tax on profits (corporation tax).

How can charities make sure that the right structures are in place to achieve efficient tax compliance?

By now, everyone will have seen the reports about Oxfam, and the resulting damage to its reputation. Donations to Oxfam have certainly been hit but it appears that donations to charities in general may fall as the public’s mistrust of charities increases.  

Changes to accounting rules – will your charity need a deed of covenant?

Charities with subsidiary companies need to understand changes to accounting rules that were announced by the Financial Reporting Council in December 2017. They may have to create a deed of covenant to allow the accounts to show the gift of that year’s profits from subsidiary to the parent charity.