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Pros and cons of using a trading subsidiary

There are a number of considerations that charities and their trustees need to take into account when deciding on whether or not to set up, and use a trading subsidiary company to carry out certain trading activities that might otherwise be carried out by the charity.

In most cases, it will depend on the type of charity, its charitable objects, the proposed activity and expected level of income.

In terms of the retail Gift Aid scheme used in many charity shops, the use of a trading subsidiary to run the shops currently allows the use of a higher £1,000 threshold of proceeds before having to notify the supporter (limited to £100 where the charity runs the shops).

Our Charity Tax team has put together some of the key advantages and disadvantages of the subsidiary structure for consideration, which was recently published as part of Charity Retail Association’s newsletter.

Should this be of interest to you, please view our fact sheet for more information, or email our Charity Tax Partner Luke Savvas. 

Pros and cons of using a trading subsidiary

You might also be interested in… Tax planning and advice for charities

As a charitable organisation, there are a wide range of exemptions you can make the most of for taxes, including corporation tax, income tax, stamp duty and business rates. You can also benefit from tax reliefs such as Gift Aid and Social Investment Tax Relief,  which provide further opportunities for charities to thrive. 

Our not-for-profit tax team help to ensure your charity is fully tax-compliant and structured optimally to make the best use of the reliefs you’re entitled to.

What sets our charity tax services apart?

Unlike others, we have separate dedicated tax specialists who work within our charity and not-for-profit team. Having chosen to specialise in the sector, most have trained as charity experts from day one. This means you have a team of experts at your disposal who really understand your sector and needs.

You can count on regular tax communications on developments and insights relevant to your industry, including our annual charity tax updates after the Chancellor’s Autumn and Spring Budgets. We also offer topical tax update seminars and bespoke fundraising workshops, keeping you up to speed with the latest requirements and opportunities.

View our upcoming events and webinars

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