BIM24240 - Mutual trading: members' clubs: different membership classes

A range of possibilities

Many clubs provide for restricted categories of members, e.g. junior members, whose rights are not equivalent to full members. However, if their subscriptions are fixed at a lower rate than full members, such that they are not intended to subsidise full members, then they should not normally be treated as trading income.

Members’ clubs can take many forms, unincorporated associations, companies limited by guarantee without share capital and clubs incorporated with a share capital (see BIM24255 for specific guidance on members’ clubs having a share capital).

Provided that use of a company structure is simply a means of enabling the members to conduct the social or recreational objectives of a members’ club incorporation does not by itself make any surplus in a members’ club taxable as trading income.