Learn how different types of charity trading are treated for tax.
The profits of primary purpose trading (including beneficiary trades and ancillary trades) are exempt from tax.
These are in principle taxable, though a small amount may be undertaken without incurring a tax charge under the small trading tax exemption.
The profits from the primary purpose element remain exempt, but profits from the non-primary purpose element are taxable (unless it falls into the small-scale exemption). Learn more.
You can do a small amount of trading that does not relate to your charity's main purpose (i.e. non-primary purpose trading) without attracting tax liability.
If the turnover from your non-primary purpose trading activity exceeds the relevant threshold, then all of the relevant profits will become subject to tax; not just those relating to the element that's over the threshold.
| Charity's gross annual income | Maximum permitted small trading turnover |
|---|---|
Under £32,000 |
£8000 |
£32,001 to £320,000 |
25% of your charity's total annual turnover |
Over £320,000 |
£80,000 |
For all non-primary purpose trading, it can sometimes be beneficial to run the activity through a non-charitable trading subsidiary.
The subsidiary can then donate its distributable profits to its parent charity. This donation is deductible by the subsidiary (this arrangement is known as 'Corporate Gift Aid') which achieves some tax efficiency.
Be careful when deciding how much of the profit should be donated. This can be no more than is formally 'distributable' and the subsidiary may need to retain and reinvest some profit to ensure its sustainability.
To understand the tax implications of trading, it’s worth gettingprofessional advice. If you don’t have an accountant, visit:
Last reviewed: 27 January 2026
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