Finance Act 2000

46 Exemption for small trades etc. U.K.

(1) [F1 Subject to subsections (2) and (2A) below, exemption—,

(a) from income tax—

(i) under Part 2 of ITTOIA 2005 in respect of a trade carried on wholly or partly in the United Kingdom, or

(ii) under or by virtue of any provision to which section 836B of the Taxes Act 1988 applies, or

(b) from corporation tax under Case I or VI of Schedule D,

shall be granted] on a claim made in that behalf to the Board, in respect of any income of a charity if the requirements of subsection (3) below are satisfied with respect to the income.

[F2 (2) Exemption shall not be granted under subsection (1) above in respect of income which is chargeable to—

(a) income tax under or by virtue of any provision to which section 836B of the Taxes Act 1988 applies, or

(b) corporation tax under Case VI of Schedule D,

by virtue of any of the provisions mentioned in subsection (2A).

(2A) The provisions are—

(a) sections 214, 547(1)(b), 703, 776, 788, 790 or 804 of the Taxes Act 1988;

(b) paragraph 52(4) of Schedule 18 to the Finance Act 1998;

(c) Chapter 9 of Part 4, and Chapter 5 of Part 5, of ITTOIA 2005; and

(d) any other enactment specified in an order made by the Treasury.]

(3) The requirements of this subsection are satisfied with respect to any income for a chargeable period if it is applied solely for the purposes of the charity and either—

(a) the charity’s gross income for the chargeable period does not exceed the requisite limit; or

(b) the charity had, at the beginning of the period, a reasonable expectation that its gross income for the period would not exceed that limit.

(4) Subject to subsection (5) below, the requisite limit is whichever is the greater of—

(a) £5,000; and

(b) whichever is the lesser of £50,000 and 25% of all of the charity’s incoming resources for the chargeable period.

(5) For a chargeable period of less than twelve months, the amounts of £5,000 and £50,000 specified in subsection (4) above shall be proportionally reduced.

(6) In this section—

• “charity” means any body of persons or trust established for charitable purposes only;

• “gross income”, in relation to a charity, means income before deduction of any expenses;

• “income”, in relation to a charity, means [F3 —

  (a)

  any profits or other income or gains —

  (i)

  which are chargeable to income tax under Part 2 of ITTOIA 2005 in respect of a trade carried on wholly or partly in the United Kingdom, or

  (ii)

  which are chargeable to income tax under or by virtue of any provision to which section 836B of the Taxes Act 1988 applies,

  and which (in either case) are not, apart from this section, exempted from income tax chargeable under or by virtue of that Part or provision, or]

  (b)

  any profits or gains or other income which is chargeable to [F4 corporation] tax under Case I or VI of Schedule D and which is not, apart this section, exempted from tax under that Case.

(7) This section applies for the year 2000-01 and subsequent years of assessment or, in the case of charities which are companies, for accounting periods beginning on or after 1st April 2000.

Textual Amendments

F1 S. 46(1) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 514(2) (with Sch. 2)

F2 S. 46(2)(2A) substituted (6.4.2005) for s. 46(2) (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 514(3) (with Sch. 2)

F3 Words in s. 46(6) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 514(4)(a) (with Sch. 2)

F4 Word in s. 46(6) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 514(4)(b) (with Sch. 2)