Corporation Tax Act 2010 section 496

Meaning of "non-charitable expenditure"

Section 496 defines what counts as "non-charitable expenditure" for a charitable company, which is important because such expenditure can restrict the tax exemptions that charities normally enjoy.

• Trading losses, property losses related to land, and losses from non-charitable miscellaneous transactions all count as non-charitable expenditure unless specific exemptions apply.
• Any expenditure not incurred solely for charitable purposes — and not already accounted for in calculating trade, property or transaction profits or losses — is treated as non-charitable expenditure.
• Funds invested in non-approved investments, or amounts lent other than as approved charitable loans or qualifying investments, are also classified as non-charitable expenditure.
• Where an item falls into more than one category it is only counted once, and excess non-charitable expenditure from later periods can be carried back to earlier periods under section 515.