What does section 466 of the Corporation Tax Act 2010 cover?

Section 466 provides an overview of Part 11 of the Corporation Tax Act 2010, which deals with the corporation tax treatment of charitable companies in the United Kingdom. It signposts provisions on exemptions from corporation tax, the treatment of gifts and payments to charitable companies, and restrictions on exemptions where non-charitable expenditure arises.

What exemptions from corporation tax are available to charitable companies under Part 11?

Under Part 11, certain types of income earned by charitable companies and other qualifying bodies are exempt from corporation tax. These exemptions are set out in sections 475 to 477 and Chapter 3. They represent a significant tax benefit for charities, although they are not unlimited and may be restricted where non-charitable expenditure occurs.

How is the non-exempt amount calculated for a charitable company?

The non-exempt amount for an accounting period is calculated under section 493 by reference to two factors: the charitable company's attributable income and gains for the period, and its non-charitable expenditure for the same period. Detailed calculation rules are found in sections 496 to 517 of the Corporation Tax Act 2010.

What happens when a charitable company incurs non-charitable expenditure?

When a charitable company incurs non-charitable expenditure, a non-exempt amount may arise under section 493. This triggers the restriction mechanism in section 492, which reduces the corporation tax exemptions otherwise available. For example, if non-charitable expenditure is £20,000, up to that amount of income could lose its tax-exempt status and become subject to corporation tax.

Corporation Tax Act 2010 section 466

Overview of Part

Section 466 provides an overview of the provisions in Part 11 of the Corporation Tax Act 2010, which deals with the corporation tax treatment of charitable companies, including exemptions, gifts, and restrictions on those exemptions.

Part 11 covers the tax treatment of gifts and payments to charitable companies, including how corporation tax on income applies and what exemptions are available (sections 471 to 474)
Certain income of charitable companies and other qualifying bodies can be exempt from corporation tax (sections 475 to 477 and Chapter 3)
Where a charitable company has a "non-exempt amount" for an accounting period, the available exemptions are restricted (sections 492 and 493)
The non-exempt amount is calculated by reference to the charity's attributable income and gains and its non-charitable expenditure for the period (sections 493 and 496 to 517)

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