Taxation of Chargeable Gains Act 1992 section 256D

How gains are attributed to the non-exempt amount: charitable companies

Section 256D sets out the process by which a charitable company's chargeable gains are allocated to its non-exempt amount — the portion of gains that will not benefit from the charity exemption and will therefore be subject to tax.

• A charitable company may choose which of its chargeable gains are to be treated as falling within the taxable (non-exempt) amount, by notifying HMRC of its selection.
• The notification must be made in writing to an officer of Revenue and Customs.
• If HMRC asks the company to make a selection and the company fails to respond within 30 days, HMRC may step in and make the allocation itself.
• The effect is that the company has first choice over which gains bear the tax charge, but if it does not act promptly, HMRC takes control of that decision.