Corporation Tax Act 2010 section 486

Exemption for investment income and non-trading profits from loan relationships

Section 486 provides an exemption from corporation tax for certain categories of savings and investment income received by charities, provided the income is applied to charitable purposes and a claim is made.

• Non-trading loan relationship profits, dividends and other company distributions, and income from exempt unauthorised unit trusts are exempt from corporation tax when received by a charitable company or when required by law, court judgment, charter, trust deed or will to be applied solely to charitable purposes.
• The exemption for dividends and distributions applies only to the extent the income falls within the corporation tax rules for distributions in Part 9A of CTA 2009, and the exemption for unauthorised unit trust income applies only to the extent it is dealt with under regulation 15 of the Unauthorised Unit Trusts (Tax) Regulations 2013.
• The exemption is available only to the extent the income is actually applied to charitable purposes — any portion used for non-charitable purposes will not qualify.
• The exemption is not automatic; the charity must make a formal claim to benefit from it.