Income Tax Act 2007 section 523

Payments from other charities: income tax liability and exemption

Section 523 imposes an income tax charge on certain payments received by charitable trusts from other charities, and provides an exemption where those payments are applied to charitable purposes.

• Payments received by charitable trusts from other charities that are not made for full consideration and are not otherwise subject to income tax or eligible for exemption are charged to income tax under this section.
• The charge applies only to UK-sourced payments; payments arising from a source outside the United Kingdom are excluded.
• Payments applied solely to charitable purposes are effectively exempt, as they are not taken into account in calculating total income.
• The trustees of the receiving charitable trust are liable for any income tax charged, and where discretionary trust payments are involved, the grossing-up rules in section 494 apply.