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As a charity you can get certain tax reliefs. To benefit you must be recognised by HM Revenue and Customs (HMRC).

Charities do not pay tax on most types of income as long as they use the money for charitable purposes.

You can claim back tax that鈥檚 been deducted, for example on bank interest and donations (this is known as Gift Aid).

When you need to pay tax

Your charity may need to pay tax if you鈥檝e:

• received income that does not qualify for tax relief
• spent any of your income on non-charitable purposes

You need to complete a tax return if your charity has tax to pay.

As a charity you do not pay tax on most of your income and gains if you use it for charitable purposes - this is known as 鈥榗haritable expenditure鈥�.

This includes tax:

• on donations
• on profits from trading
• on rental or investment income, for example bank interest
• on profits when you sell or 鈥�dispose of鈥� an asset, like property or shares
• when you buy property

To get tax relief you must be recognised by HM Revenue and Customs (HMRC).

When you do pay tax

Charities pay tax on:

• dividends received from UK companies before 6 April 2016
• profits from developing land or property
• purchases - but there are special VAT rules for charities

Charities pay business rates on non-domestic buildings, but they get an 80% discount.

You must pay tax on any money you do not use for charitable purposes. This is known as 鈥榥on-charitable expenditure鈥�.

Pay tax

You must complete a tax return if your charity needs to pay tax or if HMRC asks you to.

Reclaim tax

You can claim back tax that鈥檚 been deducted, for example on:

• donations (this is known as Gift Aid)
• bank interest

To get tax relief your charity must be:

• based in the UK
• established for charitable purposes only
• registered with the Charity Commission or another regulator, if this applies to you
• run by 鈥榝it and proper persons鈥�
• recognised by HM Revenue and Customs (HMRC)

Register your charity鈥檚 details to get recognition from HMRC

Register your charity鈥檚 details using HMRC鈥檚 online service.

If you receive income with tax deducted, for example donations you can claim Gift Aid on, you can claim it back:

• online, using the Charities Online service
• through software that works with Charities Online
• by post, using form ChR1 - call the helpline to order it

Bank interest

You can arrange to receive interest without tax deducted. Show your bank your letter of recognition from HM Revenue and Customs (HMRC).

If tax has already been taken from your interest you can claim it back for:

• the current tax year by asking your bank
• previous tax years by claiming it from HMRC

If your charity has income that does not qualify for tax relief you must complete a tax return.

If you have no tax to pay, complete a tax return only if HM Revenue and Customs (HMRC) asks you to.

Company Tax Returns

Complete a Company Tax Return if your charity is a limited company or unincorporated association. Include the supplementary pages for charities and community amateur sports clubs (CASCs).

A charity is a limited company if it was set up by a:

• constitution
• memorandum and articles of association
• royal charter or Act of Parliament

Limited companies must also send annual accounts to Companies House.

Trusts

Complete a Trust and Estate Self Assessment tax return if your charity is a trust. A charity is a trust if it was set up by a trust deed or will.

Penalties and deadlines

You must complete a tax return when HMRC asks you to, even if no tax is due.

The deadline depends on whether you complete a Company Tax Return or a Self Assessment tax return.