(1) In determining whether section 517C(1) or 517E(1) applies, account is to be taken of any method, however indirect, by which—
(a) any property or right is transferred or transmitted, or
(b) the value of any property or right is enhanced or diminished.
(2) Accordingly—
(a) the occasion of the transfer or transmission of any property or right, however indirect, and
(b) the occasion when the value of any property or right is enhanced,
may be an occasion on which section 517C(1) or 517E(1) applies.
(3) Subsections (1) and (2) apply in particular—
(a) to sales, contracts and other transactions made otherwise than for full consideration or for more than full consideration,
(b) to any method by which any property or right, or the control of any property or right, is transferred or transmitted by assigning—
(i) share capital or other rights in a company,
(ii) rights in a partnership, or
(iii) an interest in settled property,
(c) to the creation of an option affecting the disposition of any property or right and the giving of consideration for granting it,
(d) to the creation of a requirement for consent affecting such a disposition and the giving of consideration for granting it,
(e) to the creation of an embargo affecting such a disposition and the giving of consideration for releasing it, and
(f) to the disposal of any property or right on the winding up, dissolution or termination of a company, partnership or trust.
(1) In this Part references to “other” persons are to be interpreted in accordance with subsections (2) to (4).
(2) A partnership or partners in a partnership may be regarded as a person or persons distinct from the individuals or other persons who are for the time being partners.
(3) The trustees of settled property may be regarded as persons distinct from the individuals or other persons who are for the time being the trustees.
(4) Personal representatives may be regarded as persons distinct from the individuals or other persons who are for the time being personal representatives.
(1) In this Part “arrangement” (except in the phrase “double taxation arrangements”) includes any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable.
(2) For the purposes of this Part any number of transactions may be regarded as constituting a single arrangement if—
(a) a common purpose can be discerned in them, or
(b) there is other sufficient evidence of a common purpose.
(1) In this Part references to a “disposal” of any property include any case in which the property is effectively disposed of (whether wholly or in part, as mentioned in subsection (2))—
(a) by one or more transactions, or
(b) by any arrangement.
(2) For the purposes of this Part—
(a) references to a disposal of land or any other property include a part disposal of the property, and
(b) there is a part disposal of property (“the asset”) where on a person making a disposal, any form of property derived from the asset remains undisposed of (including in cases where an interest or right in or over the asset is created by the disposal, as well as where it subsists before the disposal).
(1) In this Part “land” includes—
(a) buildings and structures,
(b) any estate, interest or right in or over land, and
(c) land under the sea or otherwise covered by water.
(2) In this Part references to property deriving its value from land include—
(a) any shareholding in a company deriving its value directly or indirectly from land,
(b) any partnership interest deriving its value directly or indirectly from land,
(c) any interest in settled property deriving its value directly or indirectly from land, and
(d) any option, consent or embargo affecting the disposition of land.
(1) For the purposes of sections 517B(1) and 517D(1) it does not matter whether the person (“P”) realising the profit or gain in question realises it for P or another person.
(2) For the purposes of subsection (1), if, for example by a premature sale, a person (“A”) directly or indirectly transmits the opportunity of realising a profit or gain to another person (“B”), A realises B's profit or gain for B.
(1) For the purposes of this Part a person (“A”) is related to another person (“B”)—
(a) throughout any period for which A and B are consolidated for accounting purposes,
(b) on any day on which the participation condition is met in relation to them, or
(c) on any day on which the 25% investment condition is met in relation to them.
(2) A and B are consolidated for accounting purposes for a period if—
(a) their financial results for a period are required to be comprised in group accounts,
(b) their financial results for the period would be required to be comprised in group accounts but for the application of an exemption, or
(c) their financial results for a period are in fact comprised in group accounts.
(3) In subsection (2) “group accounts” means accounts prepared under—
(a) section 399 of the Companies Act 2006, or
(b) any corresponding provision of the law of a territory outside the United Kingdom.
(4) The participation condition is met in relation to A and B (“the relevant parties”) on a day if, within the period of 6 months beginning with that day—
(a) one of the relevant parties directly or indirectly participates in the management, control or capital of the other, or
(b) the same person or persons directly or indirectly participate in the management, control or capital of each of the relevant parties.
(5) The 25% investment condition is met in relation to A and B if—
(a) one of them has a 25% investment in the other, or
(b) a third person has a 25% investment in each of them.
(6) Section 259NC of TIOPA 2010 applies for the purposes of determining whether a person has a “25% investment” in another person for the purposes of this section as it applies for the purposes of section 259NB(2) of that Act.
(7) In Chapter 2 of Part 4 of TIOPA 2010, sections 157(2), 158(4), 159(2) and 160(2) (which are about the interpretation of references to direct and indirect participation) apply in relation to subsection (4) as they apply in relation to subsection (4) of section 259NA of that Act.
(1) This Part makes provision about some gifts and payments made to charitable trusts, including provision imposing charges to income tax and conferring exemptions from those charges (see sections 520 to 523A).
(2) This Part also provides for some of the income of charitable trusts and others to be exempt from charges to income tax (see sections 524 to 537).
(3) In the provisions of this Part containing exemptions, references to total income of a charitable trust are to the total income of the trustees of the charitable trust concerned.
(4) See sections 538 and 538A for provision about making claims for the exemptions under this Part.
(5) In the case of a charitable trust which has a non-exempt amount for a tax year (see section 540), the exemptions under this Part are subject to restrictions (see section 539).
(6) The non-exempt amount for a tax year depends on the charitable trust's attributable income and gains for the tax year and its non-charitable expenditure for the tax year (see sections 540 and 543 to 564).
520 Gifts entitling donor to gift aid relief: income tax treated as paid
(1) This section applies if a gift is made to a charitable trust by an individual and the gift is a qualifying donation for the purposes of Chapter 2 of Part 8 (gift aid).
(2) The charitable trust is treated as receiving, under deduction of income tax at the basic rate for the tax year in which the gift is made, a gift of an amount equal to the grossed up amount of the gift.
(3) The grossed up amount of the gift is the amount of the gift grossed up by reference to the basic rate for the tax year in which the gift is made.
(4) The income tax treated as deducted is treated as income tax paid by the trustees of the charitable trust.
521 Gifts entitling donor to gift aid relief: income tax liability and exemption
(1) This section applies if gifts are made to charitable trusts by individuals and the gifts are qualifying donations for the purposes of Chapter 2 of Part 8 (gift aid).
(2) Income tax is charged on the gifts under this section.
(3) It is charged on the grossed up amount of the gifts arising in the tax year.
(4) But a gift is not taken into account in calculating total income so far as it is applied to charitable purposes only.
(5) The grossed up amount of a gift is the amount of the gift grossed up by reference to the basic rate for the tax year in which the gift is made.
(6) The trustees of the charitable trust are liable for any tax charged under this section.
(7) Schedule 19 to FA 2008 contains provision for transitional payments to charitable trusts in respect of gifts made in the tax years 2008-09 to 2010-11.
521A Gifts under payroll deduction schemes: income tax liability and exemption
(1) This section applies if gifts are made to charitable trusts by individuals and the gifts are donations for the purposes of Part 12 of ITEPA 2003 (payroll giving).
(2) Income tax is charged on the gifts under this section.
(3) It is charged on the full amount of the gifts arising in the tax year.
(4) But a gift is not taken into account in calculating total income so far as it is applied to charitable purposes only.
(5) The trustees of the charitable trust are liable for any tax charged under this section.
522 Gifts of money from companies: income tax liability and exemption
(1) This section applies if gifts of sums of money are made to charitable trusts by companies.
(2) But this section does not apply to a gift of a sum of money made by a company that is itself a charity (see section 523).
(3) Income tax is charged on the gifts under this section.
(4) It is charged on the full amount of the gifts arising in the tax year.
(5) But a gift is not taken into account in calculating total income so far as it is applied to charitable purposes only.
(6) The trustees of the charitable trust are liable for any tax charged under this section.
523 Payments from other charities: income tax liability and exemption
(1) This section applies to payments which—
(a) are received by charitable trusts from other charities,
(b) are not made for full consideration in money or money's worth,
(c) are not charged to income tax, apart from this section, and
(d) are not of a description which (on a claim) would be exempt from income tax under any of the exemptions conferred by this Part.
(2) This section does not apply to a payment which arises from a source outside the United Kingdom.
(3) Income tax is charged under this section on the payments.
(4) It is charged on the full amount of the payments arising in the tax year.
(5) But a payment is not taken into account in calculating total income so far as it is applied to charitable purposes only.
(6) The amount charged under this section in the case of certain payments made by the trustees of a charitable trust in the exercise of a discretion is subject to section 494 (grossing up of discretionary payments from trusts).
(7) The trustees of the charitable trust are liable for any tax charged under this section.
(1) This section applies to a gift of property—
(a) that is made by will to a charitable trust, and
(b) that is not charged to income tax, apart from this section.
(2) Income tax is charged on the gift.
(3) It is charged on the total value of the property so received in the tax year; and for that purpose the value of any property other than money is its market value as at the time of the death of the person by whose will the gift of the property is made.
(4) But property is not taken into account in calculating total income so far as it is applied to charitable purposes only.
(5) The trustees of the charitable trust are liable for any tax charged under this section.
(6) A gift of property made to a charitable trust is treated for the purposes of this section as made by will if—
(a) the gift is made to the trust by virtue of the variation, after a person’s death, of a disposition of property effected by the person’s will, and
(b) the variation is treated under section 142 of IHTA 1984 (alteration of dispositions taking effect on death) as having been effected by the deceased.
(7) In this section—
“property” includes rights and interests of any description;
“will” includes a testament, a codicil and any testamentary disposition of property.
524 Exemption for profits etc of charitable trades
(1) The income mentioned in subsection (2) is not taken into account in calculating total income if conditions A and B are met.
(2) The income referred to in subsection (1) is—
(a) the profits of a trade carried on by a charitable trust,
(b) amounts treated as adjustment income of a charitable trust under section 228 of ITTOIA 2005 in respect of a trade carried on by the trust, and
(c) post-cessation receipts arising from a trade carried on by a charitable trust which are received by the trustees of the trust or to which they are entitled.
(3) Condition A is—
(a) in the case of the profits of a trade, that the profits are profits of a tax year in relation to which the trade is a charitable trade,
(b) in the case of an amount treated as adjustment income, that the amount arises in a tax year in relation to which the trade is a charitable trade, and
(c) in the case of a post-cessation receipt, that the trade was a charitable trade in relation to the tax year in which the cessation occurred.
See section 525 as to when a trade is a charitable trade in relation to a tax year.
(4) Condition B is that the profits are, or the amount or post-cessation receipt is, (as the case may be) applied to the purposes of the charitable trust only.
(5) Sections 232(1) and (2), 235 and 236 of ITTOIA 2005 (when adjustment income is treated as arising) apply for the purposes of subsection (3) as they apply for the purposes of Chapter 17 of Part 2 of that Act.
(6) In this section “post-cessation receipt” means an amount that is a post-cessation receipt for the purposes of Chapter 18 of Part 2 of ITTOIA 2005 (post-cessation receipts) (see sections 246 to 253 of that Act).
(1) For the purposes of this Part a trade carried on by a charitable trust is a charitable trade in relation to a tax year if throughout ... the tax year—
(a) the trade is exercised in the course of carrying out a primary purpose of the charitable trust, or
(b) the work in connection with the trade is mainly carried out by beneficiaries of the charitable trust.
(2) For the purposes of subsection (1)(a), if a trade is exercised partly in the course of carrying out a primary purpose of the charitable trust and partly otherwise, each part is to be treated as a separate trade.
(3) For the purposes of subsection (1)(b), if work in connection with a trade is carried out partly but not mainly by beneficiaries, the part in connection with which work is carried out by beneficiaries and the other part are to be treated as separate trades.
(4) If different parts of a trade are treated as separate trades under subsection (2) or (3), a just and reasonable apportionment is to be made for that purpose of—
(a) expenses and receipts of the trade, and
(b) any amounts which are treated as adjustment income under section 228 of ITTOIA 2005 in respect of the trade, or which are post-cessation receipts arising from the trade for the purposes of Chapter 18 of Part 2 of that Act.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
526 Exemption for profits etc of small-scale trades
(1) The income mentioned in subsection (2) is not taken into account in calculating total income if conditions A and B are met.
(2) The income referred to in subsection (1) is—
(a) the profits of a trade carried on by a charitable trust,
(b) amounts treated as adjustment income of a charitable trust under section 228 of ITTOIA 2005 in respect of a trade carried on by the trust, and
(c) post-cessation receipts arising from a trade carried on by a charitable trust which are received by the trustees of the trust or to which they are entitled.
(3) Subsection (1) does not apply in respect of—
(a) profits of a trade that are, apart from this section, exempt from income tax chargeable under Part 2 of ITTOIA 2005,
(b) amounts treated as adjustment income that are, apart from this section, exempt from income tax chargeable under Chapter 17 of Part 2 of that Act, or
(c) post-cessation receipts that are, apart from this section, exempt from income tax chargeable under Chapter 18 of Part 2 of that Act.
(4) Condition A is—
(a) in the case of the profits of a trade, that the profits are profits of a tax year in relation to which the condition specified in section 528 (condition as to trading and miscellaneous incoming resources) is met,
(b) in the case of an amount treated as adjustment income, that the amount arises in such a tax year, and
(c) in the case of a post-cessation receipt, that it is received in such a tax year.
(5) Condition B is that the profits are, or the amount or post-cessation receipt is, (as the case may be) applied to the purposes of the charitable trust only.
(6) Sections 232(1) and (2), 235 and 236 of ITTOIA 2005 (when adjustment income is treated as arising) apply for the purposes of subsection (4) as they apply for the purposes of Chapter 17 of Part 2 of that Act.
(7) In this section “post-cessation receipt” means an amount that is a post-cessation receipt for the purposes of Chapter 18 of Part 2 of that Act (post-cessation receipts) (see sections 246 to 253 of that Act).
527 Exemption from charges under provisions to which section 1016 applies
(1) Any income or gains of a charitable trust that is or are chargeable to income tax under or by virtue of any provision to which section 1016 applies is not or are not taken into account in calculating total income if conditions A and B are met.
(2) Subsection (1) does not apply in respect of any income or gains chargeable to income tax by virtue of any of—
(a) section 1086(2) of CTA 2010 (chargeable payments connected with exempt distributions),
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance etc),
(d) Chapter 5 of Part 5 of that Act (settlements: amounts treated as income of settlor), and
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(f) any other enactment specified in an order made by the Treasury.
(3) Subsection (1) does not apply in respect of any income that is, or gains that are, apart from this section, exempt from income tax chargeable under or by virtue of any provision to which section 1016 applies.
(4) Condition A is that the income is, or the gains are, for a tax year in relation to which the condition specified in section 528 is met.
(5) Condition B is that the income is, or the gains are, applied to the purposes of the charitable trust only.
528 Condition as to trading and miscellaneous incoming resources
(1) The condition in this section is met in relation to a tax year if—
(a) the sum of the charitable trust's trading incoming resources and miscellaneous incoming resources for the tax year does not exceed the requisite limit for the tax year, or
(b) the trustees of the charitable trust had, at the beginning of the tax year, a reasonable expectation that it would not do so.
(2) The charitable trust's “trading incoming resources” for the tax year are—
(a) the incoming resources which are required to be taken into account in calculating the profits of, or losses made in, ... the tax year of any non-exempt trade carried on by the charitable trust, and
(b) the incoming resources which are treated as adjustment income under section 228 of ITTOIA 2005 in respect of such a trade, or which are post-cessation receipts arising from such a trade.
“Post-cessation receipt” has the meaning given by section 526(7).
(3) For the purposes of subsection (2) a trade is a “non-exempt trade” if any profits of the trade would not, apart from section 526, be exempt from income tax chargeable under Part 2 of ITTOIA 2005.
(4) The charitable trust's “miscellaneous incoming resources” for the tax year are the incoming resources which are required to be taken into account in calculating non-exempt miscellaneous income or non-exempt miscellaneous losses for the tax year.
(5) In this section—
“non-exempt miscellaneous income” means income or gains chargeable to income tax under or by virtue of any provision to which section 1016 applies that is not, or are not, apart from section 526 or 527, exempt from income tax chargeable under or by virtue of that provision, and
“non-exempt miscellaneous losses” means losses arising from a transaction which is of such a nature that if income or gains had arisen from it the income would have been non-exempt miscellaneous income.
(6) The requisite limit—
(a) is 25% of the charitable trust's total incoming resources for the tax year, but
(b) must not be less than £8,000 or more than £80,000.
529 Exemption for profits from fund-raising events
(1) The profits of a trade carried on by a charitable trust are not taken into account in calculating total income so far as they arise from a VAT-exempt event.
(2) Subsection (1) applies so far as the profits are either applied for charitable purposes or transferred to another charity.
(3) An event is a VAT-exempt event if the supply of goods and services by the charitable trust in connection with the event would be exempt from value added tax under Group 12 of Schedule 9 to the Value Added Tax Act 1994 (c. 23) (fund-raising events by charities and other qualifying bodies).
(1) The profits accruing to a charitable trust from a lottery are not taken into account in calculating total income if conditions A and B are met.
(2) Condition A is that—
(a) the lottery is an exempt lottery within the meaning of the Gambling Act 2005 by virtue of Part 1 or 4 of Schedule 11 to that Act,
(ab) the lottery is promoted in accordance with a lottery operating licence within the meaning of Part 5 of that Act, or
(b) the lottery is promoted and conducted in accordance with Article 133 or 135 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985 (S.I. 1985/1204 (N.I. 11)).
(3) Condition B is that the profits are applied to the purposes of the charitable trust only.
(1) Income which is chargeable to income tax under Part 2 of ITTOIA 2005 (trading income) as a result of section 261 of that Act is not taken into account in calculating total income so far as—
(a) it arises in respect of rents or other receipts from an estate, interest or right in or over land, and
(b) the estate, interest or right is vested in any person in trust for a charitable trust or for charitable purposes.
(2) Income which is chargeable to income tax under Part 3 of ITTOIA 2005 (property income) is not taken into account in calculating total income so far as—
(a) it arises in respect of an estate, interest or right in or over land, and
(b) the estate, interest or right is vested in any person in trust for a charitable trust or for charitable purposes.
(2A) Distributions to which section 548 of CTA 2010 (Real Estate Investment Trusts: distributions) applies and which are chargeable to income tax under Part 2 or Part 3 of ITTOIA 2005 are not taken into account in calculating total income so far as they arise in respect of shares vested in a person in trust for a charitable trust or for charitable purposes.
(3) Subsection (1) to (2A) apply so far as the income is applied to charitable purposes only.
(1) The income mentioned in subsection (2) is not taken into account in calculating total income if—
(a) it is income of a charitable trust, or
(b) it is required, under an Act, court judgment, charter, trust deed or will, to be applied to charitable purposes only.
(2) The income referred to in subsection (1) is—
(a) interest,
(b) a dividend or other distribution of a UK resident company,
(c) a dividend of a non-UK resident company,
(d) an annuity payment under a purchased life annuity,
(e) profits on the disposal of deeply discounted securities, or
(f) income treated for the purposes of regulation 15 of the Unauthorised Unit Trusts (Tax) Regulations 2013 as received by a unit holder from an exempt unauthorised unit trust.
(3) Subsection (1) applies only so far as the income falls within, and is dealt with under, Part 4 of ITTOIA 2005 (see section 366 of that Act as to provisions given priority over Part 4).
(4) Subsection (1) applies so far as the income is applied to charitable purposes only.
(5) In this section—
“deeply discounted security” has the same meaning as in Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) (see section 430 of that Act),
“disposal”, in relation to a deeply discounted security, has the same meaning as in Chapter 8 of Part 4 of that Act (see section 437(1) of that Act),
“dividend”, in relation to a UK resident company, has the same meaning as in Chapter 3 of Part 4 of that Act (dividends etc from UK resident companies etc) (see section 382(4) of that Act),
“interest” includes anything treated as interest for the purposes of Chapter 2 of Part 4 of that Act (interest), and
“purchased life annuity” has the same meaning as in Chapter 7 of Part 4 of that Act (purchased life annuity payments) (see section 423 of that Act).
(1) Public revenue dividends on securities which are in the name of trustees are not taken into account in calculating total income so far as the dividends are applicable and applied only for the repair of—
(a) a cathedral, college, church or chapel, or
(b) a building used only for the purposes of divine worship.
(2) In this section “public revenue dividends” means—
(a) income from securities which is payable out of the public revenue of the United Kingdom or Northern Ireland, or
(b) income from securities issued by or on behalf of a government or a public or local authority in a country outside the United Kingdom.
(1) Profits or gains arising to a charitable trust from the disposal of exempt deposit rights are not taken into account in calculating total income.
(2) Subsection (1) applies so far as the profits or gains are applied to charitable purposes only.
(3) For the purposes of this section, the exercise of an exempt deposit right is a disposal of it, except so far as the right is a right to receive interest.
(4) In this section “exempt deposit rights” means—
(a) a right to receive, with or without interest, a principal amount stated in, or determined in accordance with, the current terms of issue of an eligible debt security, where in accordance with those terms the issue of uncertificated units of the eligible debt security corresponds to the issue of a certificate of deposit,
(b) a right to receive the principal amount stated in a certificate of deposit, with or without interest, and
(c) an uncertificated right to receive a principal amount, with or without interest, as a result of a deposit of money.
(5) In this section—
“eligible debt security” has the meaning given in regulation 3(1) of the Uncertificated Securities Regulations 2001 (S.I. 2001/3755),
“uncertificated”, in relation to a unit, has the meaning given in regulation 3(1) of the Uncertificated Securities Regulations 2001,
“uncertificated right” means a right in respect of which no certificate of deposit has been issued, although the person for the time being entitled to it is entitled to call for the issue of such a certificate, and
“unit” has the meaning given in regulation 3(1) of the Uncertificated Securities Regulations 2001.
(1) Offshore income gains accruing to a charitable trust are not taken into account in calculating total income.
(2) Subsection (1) applies if the gain is applicable and applied to charitable purposes only.
(3) In this section “offshore income gain” has the same meaning as in Chapter 5 of Part 2 of the Offshore (Tax) Funds Regulations 2009 (S.I. 2009/3001).
(4) See regulation 31(3) to (5) of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), which—
(a) applies where property held on charitable trusts ceases to be subject to charitable trusts, and
(b) provides for any gain accruing under that subsection to be treated as an offshore income gain not accruing to a charity.
(1) The income mentioned in subsection (3) is not taken into account in calculating total income if—
(a) it is income of a charitable trust, or
(b) it is required, under an Act, court judgment, charter, trust deed or will, to be applied to charitable purposes only.
(2) Subsection (1) applies so far as the income is applied to charitable purposes only.
(3) The income referred to in subsection (1) is—
(a) royalties and other income from intellectual property that do not fall within Chapter 2 of Part 2 of ITTOIA 2005 (receipts of a trade etc),
(b) income derived from a relevant telecommunication right that is not income falling within Chapter 2 of Part 2 of ITTOIA 2005 (receipts of a trade etc),
(c) annual payments charged to tax under Chapter 7 of Part 5 of ITTOIA 2005, and
(d) relevant foreign distributions.
(4) In this section—
“intellectual property” has the same meaning as in section 579 of ITTOIA 2005,
“relevant foreign distribution” means a distribution of a non-UK resident company which—
is not chargeable to tax under Chapter 4 of Part 4 of ITTOIA 2005 (dividends from non-UK resident companies), but
would be chargeable to tax under Chapter 3 of that Part of that Act (dividends etc from UK resident companies etc) if the company were a UK resident company, and
“relevant telecommunication right” has the same meaning as in Chapter 10 of Part 2 of that Act (trade profits: certain telecommunications rights) (see section 146 of that Act).
537 Exemption for income from estates in administration
(1) If the person liable under section 659 of ITTOIA 2005 for any income tax charged under section 649 of that Act (charge to tax on estate income) is the trustee of a charitable trust, the estate income is not taken into account in calculating total income.
(2) Subsection (1) applies so far as the estate income is applied to the purposes of the charitable trust only.
(3) In this section “estate income” has the same meaning as in Chapter 6 of Part 5 of ITTOIA 2005 (beneficiaries' income from estates in administration) (see section 649(2) of that Act).
(A1) This section applies to claims for—
(a) repayment of income tax treated as having been paid by virtue of section 520(4) (gift aid relief: income tax treated as paid by trustees of charitable trust), or
(b) repayment of income tax deducted at source from income to which any of the following applies—
(i) section 532 (exemption for savings and investment income),
(ii) section 533 (exemption for public revenue dividends),
(iii) section 536 (exemption for certain miscellaneous income), or
(iv) section 537 (exemption for income from estates in administration).
(1) This section also applies to claims for amounts to be exempt from tax by virtue of—
(a) section 521(4) (gifts entitling donor to gift aid relief: charitable trusts), or
(b) any of the provisions mentioned in subsection (A1)(b).
(2) A claim to which this section applies may be made—
(a) to an officer of Revenue and Customs, or
(b) by being included in a return under section 8A of TMA 1970 (trustee's self-assessment return).
(3) In this section—
“free-standing claim” means a claim made as mentioned in subsection (2)(a), and
“tax return claim” means a claim made as mentioned in subsection (2)(b).
(4) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision—
(a) limiting the number of free-standing claims that may be made by a person in a tax year, or
(b) requiring a claim for an amount below an amount specified in the regulations to be made as a tax return claim.
(5) The regulations may make different provision for different cases or purposes.
(1) This section applies if a charitable trust has a non-exempt amount for a tax year (see section 540).
(2) The exemptions under this Part do not apply, and are treated as never having applied, to so much of any income of the charitable trust for the tax year as is attributed under section 541 to the non-exempt amount.
(3) Section 256(4) of TCGA 1992 contains corresponding restrictions which apply in relation to section 256(1) of that Act (gains accruing to charities not to be chargeable gains).
(1) A charitable trust has a non-exempt amount for a tax year if it has—
(a) non-charitable expenditure for the tax year (amount A), and
(b) attributable income and gains for the tax year (amount B).
(2) The non-exempt amount for the tax year is—
(a) amount A, or
(b) if less, amount B.
(3) For the purposes of this Part—
(a) a charitable trust's “attributable income” for a tax year is the charitable trust's income for the tax year that is exempt from income tax as a result of any of the exemptions under this Part,
(b) a charitable trust's “attributable gains” for a tax year are any gains accruing to the charitable trust in the tax year that as a result of section 256(1) of TCGA 1992, are not chargeable gains, and
(c) a charitable trust's “attributable income and gains” for a tax year is the sum of its attributable income for the tax year and its attributable gains for the tax year.
(4) In applying subsection (3)(a) ignore any restrictions on the exemptions under this Part which result from section 539(2).
(5) In applying subsection (3)(b) ignore any restriction on the exemption under section 256(1) of TCGA 1992 which results from section 256(4) of that Act.
(1) This section applies if a charitable trust has a non-exempt amount for a tax year.
(2) Attributable income of the charitable trust for the tax year may be attributed to the non-exempt amount but only so far as the non-exempt amount has not been used up.
(3) The non-exempt amount can be used up (in whole or in part) by—
(a) attributable income being attributed to it under this section, or
(b) attributable gains being attributed to it under section 256A of TCGA 1992.
(4) The whole of the non-exempt amount must be used up by—
(a) attributable income being attributed to the whole of it under this section,
(b) attributable gains being attributed to the whole of it under section 256A of TCGA 1992, or
(c) a combination of attributable income being attributed to some of it under this section and attributable gains being attributed to the rest of it under section 256A of TCGA 1992.
(5) See section 542 for the way in which income is to be attributed to the non-exempt amount under this section.
542 How income is attributed to the non-exempt amount
(1) This section is about the ways in which attributable income can be attributed to a non-exempt amount under section 541.
(2) The trustees of the charitable trust may specify the attributable income that is to be attributed to the non-exempt amount.
(3) A specification under subsection (2) is made by notice to an officer of Revenue and Customs.
(4) Subsection (6) applies if—
(a) an officer of Revenue and Customs requires the trustees of a charitable trust to make a specification under this section, and
(b) the trustees have not given notice under subsection (3) of the specification before the end of the required period.
(5) The required period is 30 days beginning with the day on which the officer made the requirement.
(6) An officer of Revenue and Customs may determine the attributable income that is to be attributed to the non-exempt amount.
(1) For the purposes of this Part a charitable trust's non-charitable expenditure for a tax year is—
(a) any loss made in the tax year in a trade carried on by the charitable trust unless—
(i) the trade is a charitable trade in relation to the tax year, or
(ii) the trade is not a charitable trade in relation to the tax year but profits of the trade arising in the tax year would be exempt from income tax as a result of one of the exemptions in sections 526, 529 or 530,
(b) any payment made in the tax year by the charitable trust in connection with a trade in circumstances where relief is available under section 96 (post-cessation trade relief) unless—
(i) the trade was a charitable trade in relation to the tax year in which the cessation occurred, or
(ii) the trade was not a charitable trade in relation to that tax year but profits of the trade arising immediately before the cessation would have been exempt from income tax as a result of one of the exemptions in sections 526, 529 or 530,
(c) any loss made in the tax year in a trade, or in a UK property business or an overseas property business, carried on by the charitable trust, if—
(i) the loss relates to land, and
(ii) profits of the trade, or income of the business, generated from the land in the tax year would not be exempt from income tax as a result of the exemptions in section 531,
(d) any payment made in the tax year by the charitable trust in connection with a trade or UK property business in circumstances where relief is available under section 96 or 125 (post-cessation trade or property relief), if—
(i) the payment relates to land, and
(ii) profits of the trade, or income of the business, generated from the land immediately before the cessation would not have been exempt from income tax as a result of the exemptions in section 531,
(e) any loss made in the tax year in a miscellaneous transaction entered into by the charitable trust otherwise than in the course of carrying out a charitable purpose,
(f) any expenditure incurred by the charitable trust in the tax year, not falling within paragraphs (b) or (d), which is not incurred for charitable purposes only and is not required to be taken into account in calculating—
(i) the profits of, or losses made in, any trade, UK property business or overseas property business carried on by the charitable trust, or
(ii) the profit or loss made in any miscellaneous transaction entered into by the charitable trust,
(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i) the amount of any of the charitable trust's funds that is invested in the tax year in an investment which is not an approved charitable investment (see section 558), and
(j) any amount lent in the tax year by the charitable trust, if the loan is neither an investment nor an approved charitable loan (see section 561).
But anything which falls within more than one of the above paragraphs counts as non-charitable expenditure only once.
(2) An amount may also be non-charitable expenditure for a tax year as a result of section 562 (excess expenditure treated as non-charitable expenditure of earlier years).
(3) This section needs to be read with—
section 525 (meaning of “charitable trade”),
sections 544 to 548 (supplementary provision in relation to this section, in particular in relation to subsection (1)(f), (i) and (j)),
sections 549 to 557 (transactions with substantial donors),
section 558 (approved charitable investments), and
section 561 (approved charitable loans).
(1) This section applies for the purposes of section 543.
(2) For rules about the calculation of losses, see—
(a) section 26 of ITTOIA 2005 (losses of a trade calculated on same basis as profits),
(b) section 272 of that Act (which applies section 26 of that Act, so that losses of a UK property business or overseas property business are calculated on the same basis as profits), and
(c) section 872 of that Act (losses from miscellaneous transactions calculated on same basis as miscellaneous income).
(3) A transaction is a miscellaneous transaction if it is of such a nature that, if income or gains had arisen from it—
(a) ignoring section 527 (exemption from charges under provisions to which section 1016 applies), it would have been charged to income tax under or by virtue of any provision to which section 1016 applies, and
(b) the trustees of the charitable trust would have been liable for any tax so chargeable.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) For the purposes of section 543(1)(f) “expenditure” includes expenditure of a capital nature.
(2) None of the following is “expenditure” for those purposes—
(a) the investment of any of the charitable trust's funds,
(b) the making of a loan by the charitable trust, or
(c) the repayment by the charitable trust of the whole or a part of a loan made to it.
546 Section 543(1)(f): tax year in which certain expenditure treated as incurred
(1) This section applies for the purposes of section 543(1)(f).
(2) Subsection (3) applies to expenditure which is referable to commitments (whether or not of a contractual nature) that the charitable trust has entered into before or during a tax year.
(3) The expenditure is treated as incurred in the tax year if, had the charitable trust been required to draw up accounts that met the requirements mentioned in subsection (4), the expenditure would have been required to be taken into account in preparing those accounts.
(4) The requirements referred to in subsection (3) are—
(a) that the accounts are drawn up for the tax year, and
(b) that UK generally accepted accounting practice applies with respect to them.
547 Section 543(1)(f): payment to body outside the UK
A payment made, or to be made, to a body situated outside the United Kingdom is non-charitable expenditure under section 543(1)(f) if—
(a) it is incurred for charitable purposes only, but
(b) the trustees of the charitable trust have not taken such steps as the Commissioners for Her Majesty's Revenue and Customs consider are reasonable in the circumstances to ensure that the payment will be applied for charitable purposes.