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A response to commentators who say that charities are exempt from tax

15 July 2014 -Some commentators on social media have pointed out that charities are exempt from tax, pointing to HMRC guidance on charity trading which relates to charities that run shops and related activities.

Such revenues are typically put through a trading company, the trading company gift aids its profits to the charity and thus is not required to pay tax on the trading company profits.

This is not unique to the charity sector: any company could choose to gift aid its profit to charity and thereby reduce its tax. 

While Christian Aid does not have retail shops, we should point out that we do operate a small trading company, Christian Aid Trading Limited, to cover the relatively small number of occasions where we have cause to sell goods, for example at regional fundraising events, in partnership with affiliates, or at festivals.

Christian Aid Trading Ltd, a company limited by guarantee, has a turnover of around £200,000.

The fact that our wholly owned trading subsidiary gift aids its profits to the Christian Aid charity as described above, is not tax avoidance or being exempt from tax; it is just doing as the law intended. 

HMRC guidance

Charities do benefit from other HMRC exemptions in addition to gift aid, such as not paying tax on interest. HMRC has published details of these here.

The key point we wish to make here is that any tax advantage we may have through Gift Aid or otherwise is based on using the law as intended by government.  

Christian Aid reports both to Companies House and the Charities Commission.

Full details of this and our charitable activity can be found in the audited accounts of our annual report.

If you care about tax avoidance, you can campaign with us.

Read our statement about recent media coverage concerning tax avoidance schemes

 

 

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