Budget blog: Positive news for Charities

31st October 2018

The Government has announced that as from April 2019, charities that are engaged in trading activities can receive an increase in the exemption limits for profits earned from those trading activities.

Currently, where a charity has total income under £20,000, the profits from trading will be exempt from corporation tax if gross trading income is no more than £5,000. Where gross charity income is between £20,001 to £200,000, profits are exempt from corporation tax where the gross trading income does not exceed 25% of the charity’s gross annual income. Where total income exceeds £200,000, profits from trading are exempt from corporation tax where trading income does not exceed £50,000.

From April 2019 these thresholds have been increased as follows:

  • £32,000 total income providing exemption from corporation tax up to £8,000 trading income
  • Gross income of between £32,001 to £320,000 providing an exemption from corporation tax on profits earned from trading income of up to 25% of total income
  • Where a charity’s income exceeds £320,000 the profits are exempt from trading activities up to a maximum trading turnover of £80,000.

Charities will also benefit from an increase in the individual donation limit under the gift aid small donations scheme where Gift Aid can be automatically applied on individual donations of up to £30 (an increase of £10 from the current limit).