Income Tax Act 2007 section 556

Connected charities

Section 556 extends the meaning of "charitable trust" so that, for the purposes of the rules on restrictions and exemptions in sections 549 to 555, it includes charities that are connected with the charitable trust.

• For the purposes of sections 549 to 555, the definition of "charitable trust" is broadened to include connected charities.
• This means that when applying the restrictions and conditions in those sections, the activities and income of connected charities are taken into account alongside those of the charitable trust itself.
• The effect is to prevent charities from circumventing the rules by splitting activities or funds across connected charitable entities.
• The provision originates from section 506C(5) of the Income and Corporation Taxes Act 1988 and was amended by the Finance Act 2011.