When do charities have to complete a Corporation Tax Return?

If you are recognised as a Charity or Community Amateur Sports Club by HMRC and use the income received by the charity – such as donations, profits from trading, bank interest, rental income and profits from selling an asset, for charitable purposes, then in the majority of cases you will not be liable to pay corporation tax.

If the charity receives income which does not qualify for tax relief or the income received by the charity is not used for charitable purposes, then corporation tax may be payable and a corporation tax return must be submitted to HMRC.

On occasion, HMRC will send a request to complete a corporation tax return to a recognised charity and this must be completed, even when the charity believes that all its income is exempt and no tax is payable.

This can be a daunting task for a trustee or volunteer who may have no experience in completing tax returns. It is important that the CT600 is delivered to HMRC before the deadline as if not, penalties will be imposed even when no tax is due to be paid.

If the charity is claiming exemption from tax on all or part of its income then the supplementary pages for charities and amateur sports clubs, known as a CT600E, should also be submitted.

If you are unsure of whether the charity’s income qualifies for tax relief or you have received a corporation tax return request and would like assistance, please contact us  and you will be put in touch with one of our team.