Income Tax (Trading and Other Income) Act 2005 section 106E

Gifts to charities etc

Section 106E disapplies the non-commercial transactions rule in section 106C where the transaction involves a gift to charity.

• Where a transaction constitutes a gift to a charity, the non-commercial adjustment rules in section 106C do not apply.
• The exclusion applies when any of the provisions in Chapter 7 (trade profits: gifts to charities etc) are relevant to the transaction in question.
• This ensures that charitable gifts are not penalised by rules designed to adjust amounts that do not reflect arm's length commercial dealings.
• In practice, the charitable gifts rules in Chapter 7 take priority and govern how the transaction is treated for tax purposes.