Academy Trust - <em>Corporation Tax</em>

Are you wondering what the corporation tax implications are for your academy trust?

It all comes down to your trading activities – whether they are primary purpose trading or non-primary purpose trading. This is determined by the objects within your academy trust’s articles of association.

Trusts generating trading profits should plan ahead to save significant money and improve cashflows in the future. That’s the kind of forward thinking we’re here to help with.

Careful consideration is needed when you are generating additional non-grant income too, as this could have corporation tax implications.

Maximising tax efficiency with HMRC’s small trading tax exemption

For corporation tax, HMRC offers a “small trading tax exemption” of £80,000 for charitable companies where gross annual income exceeds £200,000. If you are generating significant levels of “other income” and creating a surplus, you might want to consider setting up a trading subsidiary.

This is permitted by most academy articles of association and comes with great benefits. Your trading subsidiary can distribute its profits up to the academy trust through gift aid, effectively reducing tax liabilities to nil.

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Corporation Tax filing for academy trusts with low trading income

But what if you’re already submitting a corporation tax return annually but generating low levels of trading income?

You may be able to apply for an exemption to remove this filing requirement. As a charitable entity, you’re entitled to apply for this exemption, depending on your trading activities.

If you’d like to discuss applying for a filing exemption or explore any tax questions specific to your academy trust, our specialist team is just a phone call away.

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