Charity – using a subsidiary trading company

One or more charities can set up a subsidiary trading company to trade on their behalf. This may be a useful strategy if your charity:

  • makes profits on trading that is not linked to its primary purpose
  • makes a profit that comes close to or is higher than the small trading tax exemption limit
  • wants to protect its assets from any trading losses
  • wants to have a separate organisation to carry out all its trading activities

VAT considerations

A charity’s trading company will not have to pay VAT on:

  • profits it makes from donated good sales (as long as it gives these profits to the parent charity)
  • fundraising events it runs for its parent charity

Other types of VAT relief that charities get are not available for their trading subsidiaries.

Trading companies must pay tax and VAT on all their other income and profits in the same way as ordinary limited companies.

Latest Blog
22
Apr

Export funding given government boost

In a significant move to bolster British businesses amidst evolving global trade dyna...

Read More
17
Apr

Small changes can make a difference

Small changes can have a significant impact when it comes to business finances. This ...

Read More
15
Apr

Managing the Cost of Living

With the rising cost of everyday essentials continuing to impact households and busin...

Read More
08
Apr

Roll out of new Minimum Wage Rates

Big news on the wage front. As of April 1, 2025, the UK has rolled out new National M...

Read More