Section 55 | Approved charitable investments: purpose test

(1)Section 558 of ITA 2007 (approved charitable investments) is amended in accordance with subsections (2) to (5).

(2)The existing text becomes subsection (2).

(3)Before that subsection insert—

(1)For the purposes of section 543 “approved charitable investment” means an investment—

(a)that is of a type listed in subsection (2) and is made for an allowable purpose, or

(b)that is not of a type listed in subsection (2) but that is approved under subsection (3).

(4)In subsection (2)—

(a)for the words before Type 1 substitute “The following are the types of investment mentioned in subsection (1)(a)—”;

(b)omit Type 12.

(5)At the end insert—

(3)An officer of Revenue and Customs may approve a loan or other investment under this subsection if satisfied, on a claim, that it is made for an allowable purpose.

(4)For the purposes of this section an investment is made “for an allowable purpose” if it is reasonable to draw the conclusion, from all the circumstances of the case, that the investment is made—

(a)for the sole purpose of benefiting the charitable trust, or

(b)for that purpose and one or more ancillary or incidental purposes,

and is not made for the avoidance of tax (whether by the trust or any other person).

(6)Section 511 of CTA 2010 (approved charitable investments) is amended in accordance with subsections (7) to (10).

(7)The existing text becomes subsection (2).

(8)Before that subsection insert—

(1)For the purposes of section 496 “approved charitable investment” means an investment—

(a)that is of a type listed in subsection (2) and is made for an allowable purpose, or

(b)that is not of a type listed in subsection (2) but that is approved under subsection (3).

(9)In subsection (2)—

(a)for the words before Type 1 substitute “The following are the types of investment mentioned in subsection (1)(a)—”;

(b)omit Type 12.

(10)At the end insert—

(3)An officer of Revenue and Customs may approve a loan or other investment under this subsection if satisfied, on a claim, that it is made for an allowable purpose.

(4)For the purposes of this section an investment is made “for an allowable purpose” if it is reasonable to draw the conclusion, from all the circumstances of the case, that the investment is made—

(a)for the sole purpose of benefiting the charitable company, or

(b)for that purpose and one or more ancillary or incidental purposes,

and is not made for the avoidance of tax (whether by the company or any other person).

(11)The amendments made by this section have effect in relation to investments made on or after 6 April 2026.