Income Tax Act 2007 section 526

Exemption for profits etc. of small-scale trades

Section 526 provides an income tax exemption for small-scale trading income earned by charitable trusts, provided that the income meets a size threshold and is applied solely to the charity's purposes.

• Trading profits, adjustment income and post-cessation receipts of a charitable trust can be excluded from total income if two conditions are satisfied: the income falls within the small-scale threshold set out in section 528 (Condition A), and the income is applied exclusively to the charitable trust's purposes (Condition B)
• The exemption covers three types of income: profits from a trade carried on by a charitable trust, amounts treated as adjustment income in respect of such a trade, and post-cessation receipts arising from such a trade that are received by or due to the trustees
• This exemption does not apply to income that is already exempt from income tax under other provisions — for example, profits from primary purpose trading are exempt under section 524, so this small-scale exemption is aimed at non-primary purpose trading activities that would otherwise be taxable
• There is no restriction limiting this exemption to trades carried on in the United Kingdom — it applies regardless of where the trade is conducted