Gift Aid: charities and trading subsidiaries reporting issues

Charity subsidiaries with negative reserves must take care over Gift Aid payments to a parent charity or risk an unwelcome liability down the line if there is a shortfall in distributable profits, says charity expert Pesh Framjee, head of not for profit and partner at Crowe Clark Whitehill

Tucked within the Charity Commission’s updated guidance on Charity Trading (24 February 2016) is an important change to its views on Gift Aid payments from trading subsidiaries where there is a shortfall in distributable profits.

Non-charitable subsidiaries of charities are liable to pay tax on trading profits in the same way as other non-charitable companies. All companies can get tax relief for charitable payments to a charity under the company Gift Aid scheme.

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