CORPORATION TAX EXEMPTION

CORPORATION TAX EXEMPTION

One of the greatest challenges facing those who are in the not for profit sector is handling corporation tax exemption. While some organisation are exempt from corporation tax, others in the NFP sector must pay this tax anyway. Knowing which status your organisation holds and what their responsibilities are is essential to ensuring that it does not fall foul of the law.

CORPORATION TAX EXEMPTION : WHICH ORGANISATIONS

  • Charities – although it is often believed that charities are tax exempt, however their tax exemptions series is very specific. So long as charities stay within them there is no tax charged, however if charities are trading they may face problems. For example, if premises are let out for weddings, conferences and meetings this may require tax to be paid
  • Community sports clubs – local amateur sports clubs provide and promote facilities for amateur sports for a recreational and social purpose and therefore should not have to pay corporation tax. However if they trade at all by providing services to non-members, temporary members or visitors, this surplus is liable to tax.
  • Community interest companies – sometimes known as CICs, these asset locked bodies have to ensure any assets or profits are principally used to benefit the community. There are no specific corporation tax exemptions for CICs and therefore their profits are fully taxable.
  • Mutuals – these are widely misunderstood. Mutual organisations are quite complex to understand as they cannot claim capital allowances or losses on mutual trades but they are fully taxable for other gains and income

Advice for Corporation Tax Exemption

When it comes to handling the tax obligations of NFP bodies, it is important to consult a firm of skilled accountants like The Accountancy Solution. This is the best way to ensure that you are meeting your tax obligations and that you are claiming exemption as and where necessary to avoid overpaying tax.

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