Section 524 | Exemption for profits etc of charitable trades

(1)The income mentioned in subsection (2) is not taken into account in calculating total income if conditions A and B are met.

(2)The income referred to in subsection (1) is—

(a)the profits of a trade carried on by a charitable trust,

(b)amounts treated as adjustment income of a charitable trust under section 228 of ITTOIA 2005 in respect of a trade carried on by the trust, and

(c)post-cessation receipts arising from a trade carried on by a charitable trust which are received by the trustees of the trust or to which they are entitled.

(3)Condition A is—

(a)in the case of the profits of a trade, that the profits are profits of a tax year in relation to which the trade is a charitable trade,

(b)in the case of an amount treated as adjustment income, that the amount arises in a tax year in relation to which the trade is a charitable trade, and

(c)in the case of a post-cessation receipt, that the trade was a charitable trade in relation to the tax year in which the cessation occurred.

See section 525 as to when a trade is a charitable trade in relation to a tax year.

(4)Condition B is that the profits are, or the amount or post-cessation receipt is, (as the case may be) applied to the purposes of the charitable trust only.

(5)Sections 232(1) and (2), 235 and 236 of ITTOIA 2005 (when adjustment income is treated as arising) apply for the purposes of subsection (3) as they apply for the purposes of Chapter 17 of Part 2 of that Act.

(6)In this section “post-cessation receipt” means an amount that is a post-cessation receipt for the purposes of Chapter 18 of Part 2 of ITTOIA 2005 (post-cessation receipts) (see sections 246 to 253 of that Act).