6.7.1 All charities are subject to the Self Assessment legislation and must submit a tax return if either:
6.7.2 Charities set up as trusts are within the Income Tax Self Assessment regime (ITSA). Their tax affairs will be dealt with on a Tax Year basis.
6.7.3 All other types of charities (for example companies limited by guarantee, bodies created by Royal Charter or Act of Parliament, Industrial and Provident societies or unincorporated associations) are within the Corporation Tax Self Assessment (CTSA) regime. Their tax affairs will be dealt with on an Accounting Period basis.
6.8.1 Charities should not send a copy of their annual accounts to HM Revenue & Customs (HMRC) Charities unless requested to do so following the issue of a tax return (ITSA) or a formal Notice to File a tax return (CTSA).
6.8.2 If a charity believes that it may have to pay tax (because some or all of its income and/or gains are not exempt from tax), it should complete a tax return and the appropriate Charity Supplementary pages and send them to HMRC Charities.6.8.3 The forms are available to download from the HMRC website or can be ordered from the HMRC Forms orderline. The orderline number for ITSA forms is 0845 9000 404, the orderline number for CTSA forms is 0845 3006 555.
6.8.4 The Self Assessment legislation requires a charity to complete and submit a tax return if either it is asked to do so or it believes that it may have a liability to tax. Some charities will be asked to submit a tax return annually but most will only be asked to submit a return from time to time. HMRC Charities will select which charities it requires a tax return from and will issue formal notices to those charities.
6.8.5 A charity that is a Trust will receive a 'Trust & Estate Tax Return' (form SA900 (PDF 208K)). All other charities will receive a 'Notice to File a Company Tax Return'. The Company Tax Return is form CT600 (PDF 131K).
6.8.6 If a charity receives either a tax return or a Notice to File it must complete and submit a tax return. A charity that completes a Company Tax Return must send a copy of its annual accounts with the return.
6.8.7 Both types of Self Assessment tax return have special charity supplementary pages which must always be completed in addition to the main tax return. The charity supplementary pages are available from the forms orderline (see 6.8.3 for telephone numbers) or can be downloaded from the HMRC website. If you have completed a Trust & Estate Return (SA900) you should complete the supplementary pages on form SA907 (PDF 67K). If you have completed a Company Tax Return (CT600) you should complete the supplementary pages on form CT600E (PDF 28K).
6.8.8 The charity supplementary pages include the claim to tax exemption and should show the income and/or gains for which the charity is claiming exemption. The supplementary pages must be signed and dated.
6.8.9 The charity supplementary pages also require confirmation that the expenditure of the charity has been for charitable purposes only (see Technical Annex II for details) and that any investments or loans made are qualifying investments or loans under the Taxes Acts (see Technical Annex III for details).
6.8.10 Where a charity claims exemption from tax on all its income and gains covered by the period in the return, it need only record 'nil' in the relevant boxes on the main Trust or Company return (SA900 or CT600), and sign and date the form. Where a charity has incurred a tax liability on all or part of its income and gains, it will be necessary to show the taxable amounts in the relevant boxes on the main return as well as signing and dating the form.
6.9.1 Transitional arrangements for smaller charities required to file their accounts using iXBRL. For a transitional period eligible charities will instead be able to file their accounts in a PDF format.
6.9.2 Charities liable to Corporation Tax must complete a Company Tax Return where HMRC issues them with a ‘Notice to Deliver a Company Tax Return’ or they have income or gains which are not covered by a relief or exemption (in which case they should tell HMRC).
6.9.3 From 1 April 2011, new rules require all companies and organisations liable to Corporation Tax to file their Company Tax Return and accounts and computations online for any accounting period ending after 31 March 2010. This includes any charities required to file a Company Tax Return. Charities liable to Corporation Tax will need to file their accounts and computations in certain specified formats, depending on the nature of the charity.
6.9.4 Most company accounts and all computations will need to be filed in a set format: Inline eXtensible Business Reporting Language (iXBRL). iXBRL is an IT standard designed specifically for business financial reporting. HMRC provides free software to submit Company Tax Returns online, which is suitable for most small companies with less complex affairs. This software includes templates which ensure accounts and computations are submitted in iXBRL format.
6.9.5 If your charity has to prepare accounts under the Companies Act 2006 or Friendly and Industrial and Provident Societies Act 1968, the new rules require you to file your accounts and computations in iXBRL format.
6.9.6 However, HMRC recognises that the accounting principles by which smaller charities prepare accounts mean that the accounts template included in the free software provided by HMRC may not be suitable for them. Until HMRC provides free software that is suitable for smaller charities, HMRC will continue to accept accounts from smaller charities in PDF format. Computations must be filed in iXBRL format but the free HMRC software should be suitable for these.
6.9.7 A ‘smaller charity’ for the purposes of this arrangement is one where, together with any wholly owned subsidiaries (companies owned by the charity), the combined income does not exceed £6.5 million for the accounting period.
6.9.8 Charities with a combined income above £6.5 million will, in almost all circumstances, need to use commercially available software to file their Company Tax Return, their accounts and any computations in iXBRL format.
6.9.9 Unincorporated associations and incorporated charities not required to prepare accounts under the Companies Act or Friendly and Industrial and Provident Societies Act 1968 (for example charities incorporated under the Charities Act) must submit computations in iXBRL format, but can continue to submit accounts as a PDF oriXBRL file.
6.9.10 Subsidiary companies of charities are required to submit returns online with accounts and computations in iXBRL format.
6.9.11 All computations forming part of a Company Tax Return must be in iXBRL. However no computation is required where the Company Tax Return supplementary page CT600E is completed and confirms that all income and gains of the charity are exempt from tax and have been or will be applied for charitable purposes. These charities should attach a letter (as a PDF file) to their online return stating that no computation is required.
6.9.12 Charitable trusts are not affected by this announcement. Charitable trusts are liable to Income Tax and make tax returns, if required, under Income Tax Self-Assessment.
6.9.13 Useful links
Switching from paper to online Company Tax Returns and electronic payment
Tax Returns for charities and
Community Amateur Sports Clubs
6.10.1 If a charity within the ITSA regime has a tax liability in a year of assessment it must make two payments on account: the first on 31 January in the tax year in question and the second on 31 July following the end of the tax year in question. Any balance still due must be paid by 31 January in the tax year following the year in question.
If a charity that is within the CTSA regime has a tax liability for an accounting period it must pay any tax due within nine months of the end of the relevant accounting period.
6.10.2 Failure to pay any tax due by the payment date will result in an interest charge.
6.10.3 The Trust Self Assessment Return (SA 900) and accompanying charity supplementary pages must be filed with HMRC Charities by 31 October after the end of the tax year if a paper copy is completed or by 31 January after the end of the year of assessment if the return is filed online.
The Company Self Assessment Return (CT 600), charity supplementary pages and annual accounts must be filed with HMRC Charities within twelve months of the end of the accounting period to which the return relates.
The filing date may be extended where the return is issued late.
6.10.4 Failure to file the return (including the charity supplementary pages and, if required, the accounts) by the filing date will result in a penalty charge.
6.11.1 There are notes to help with completion of the returns and the charity supplementary pages.
6.11.2 A charity receiving a request for a return should consider contacting its professional advisers for help in completing the return, particularly if figures need to be extracted from the accounts or a liability to tax assessed.
6.11.3 If there are specific problems in completing the charity supplementary pages, HMRC Charities may be able to help.
The HMRC Charity Helpline can be contacted as follows:
HMRC Charities
St John's House
Merton Road
Liverpool
Merseyside
L75 1BB
