The small trading tax exemption limits have been updated for 2019 to 2020

A charity can carry on a trading activity with no corporation tax consequences provided that activity is ‘primary purpose trading’ – examples could be charging fees for educational courses or where the trading activity is mainly carried out by the beneficiaries themselves.

A charity can also carry on a trade which is outside its primary purpose, for example buying and selling greetings cards, without having to set up a separate trading company, provided the income from that trade is below the small trading exemption limits. Once that income exceeds those limits the whole profit from the trade becomes taxable – this is the point at which to set up a separate trading company.

The table below shows how the small trading tax exemption limits are applied, and do call the accounts team on 01782 683030 or e-mail if you need further advice.