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540 | The non-exempt amount |
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(1) | A charitable trust has a non-exempt amount for a tax year if it has— |
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(a) | non-charitable expenditure for the tax year (amount A), and |
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(b) | attributable income and gains for the tax year (amount B). |
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(2) | The non-exempt amount for the tax year is— |
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| |
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(3) | For the purposes of this Part— |
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(a) | a charitable trust’s “attributable income” for a tax year is the charitable |
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trust’s income for the tax year that is exempt from income tax as a result |
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of any of the exemptions under this Part, |
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(b) | a charitable trust’s “attributable gains” for a tax year are any gains |
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accruing to the charitable trust in the tax year that as a result of section |
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261 of TCGA 1992, are not chargeable gains, and |
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(c) | a charitable trust’s “attributable income and gains” for a tax year is the |
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sum of its attributable income for the tax year and its attributable gains |
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(4) | In applying subsection (3)(a) ignore any restrictions on the exemptions under |
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this Part which result from section 539(2). |
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(5) | In applying subsection (3)(b) ignore any restriction on the exemption under |
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section 256(1) of TCGA 1992 which results from section 256(4) of that Act. |
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541 | Attributing income to the non-exempt amount |
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(1) | This section applies if a charitable trust has a non-exempt amount for a tax |
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(2) | Attributable income of the charitable trust for the tax year may be attributed to |
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the non-exempt amount but only so far as the non-exempt amount has not been |
| |
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(3) | The non-exempt amount can be used up (in whole or in part) by— |
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(a) | attributable income being attributed to it under this section, or |
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(b) | attributable gains being attributed to it under section 256A of TCGA |
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(4) | The whole of the non-exempt amount must be used up by— |
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(a) | attributable income being attributed to the whole of it under this |
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(b) | attributable gains being attributed to the whole of it under section 256A |
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(c) | a combination of attributable income being attributed to some of it |
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under this section and attributable gains being attributed to the rest of |
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it under section 256A of TCGA 1992. |
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(5) | See section 542 for the way in which income is to be attributed to the non- |
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exempt amount under this section. |
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|
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542 | How income is attributed to the non-exempt amount |
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(1) | This section is about the ways in which attributable income can be attributed |
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to a non-exempt amount under section 541. |
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(2) | The trustees of the charitable trust may specify the attributable income that is |
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to be attributed to the non-exempt amount. |
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(3) | A specification under subsection (2) is made by notice to an officer of Revenue |
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(4) | Subsection (6) applies if— |
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(a) | an officer of Revenue and Customs requires the trustees of a charitable |
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trust to make a specification under this section, and |
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(b) | the trustees have not given notice under subsection (3) of the |
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specification before the end of the required period. |
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(5) | The required period is 30 days beginning with the day on which the officer |
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(6) | An officer of Revenue and Customs may determine the attributable income |
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that is to be attributed to the non-exempt amount. |
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Non-charitable expenditure |
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543 | Meaning of “non-charitable expenditure” |
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(1) | For the purposes of this Part a charitable trust’s non-charitable expenditure for |
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(a) | any loss made in the tax year in a trade carried on by the charitable trust |
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(i) | the trade is a charitable trade in relation to the tax year, or |
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(ii) | the trade is not a charitable trade in relation to the tax year but |
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profits of the trade arising in the tax year would be exempt from |
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income tax as a result of one of the exemptions in sections 526, |
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(b) | any payment made in the tax year by the charitable trust in connection |
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with a trade in circumstances where relief is available under section 96 |
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(post-cessation trade relief) unless— |
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(i) | the trade was a charitable trade in relation to the tax year in |
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which the cessation occurred, or |
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(ii) | the trade was not a charitable trade in relation to that tax year |
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but profits of the trade arising immediately before the cessation |
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would have been exempt from income tax as a result of one of |
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(c) | any loss made in the tax year in a trade, or in a UK property business or |
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an overseas property business, carried on by the charitable trust, if— |
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(i) | the loss relates to land, and |
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(ii) | profits of the trade, or income of the business, generated from |
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the land in the tax year would not be exempt from income tax |
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as a result of the exemptions in section 531, |
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(d) | any payment made in the tax year by the charitable trust in connection |
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with a trade or UK property business in circumstances where relief is |
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available under section 96 or 125 (post-cessation trade or property |
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(i) | the payment relates to land, and |
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(ii) | profits of the trade, or income of the business, generated from |
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the land immediately before the cessation would not have been |
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exempt from income tax as a result of the exemptions in section |
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(e) | any loss made in the tax year in a miscellaneous transaction entered |
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into by the charitable trust otherwise than in the course of carrying out |
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(f) | any expenditure incurred by the charitable trust in the tax year, not |
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falling within paragraphs (b) or (d), which is not incurred for charitable |
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purposes only and is not required to be taken into account in |
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(i) | the profits of, or losses made in, any trade, UK property |
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business or overseas property business carried on by the |
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(ii) | the profit or loss made in any miscellaneous transaction entered |
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into by the charitable trust, |
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(g) | any payment made in the tax year by the charitable trust to a |
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substantial donor which is treated under section 551(1) or (5) as non- |
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(h) | any non-charitable expenditure treated as incurred under section |
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551(2) as a result of a transaction between the charitable trust and a |
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(i) | the amount of any of the charitable trust’s funds that is invested in the |
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tax year in an investment which is not an approved charitable |
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investment (see section 558), and |
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(j) | any amount lent in the tax year by the charitable trust, if the loan is |
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neither an investment nor an approved charitable loan (see section 561). |
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| But anything which falls within more than one of the above paragraphs counts |
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as non-charitable expenditure only once. |
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(2) | An amount may also be non-charitable expenditure for a tax year as a result of |
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section 562 (excess expenditure treated as non-charitable expenditure of earlier |
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(3) | This section needs to be read with— |
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section 525 (meaning of “charitable trade”), |
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sections 544 to 548 (supplementary provision in relation to this section, in |
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particular in relation to subsection (1)(f), (i) and (j)), |
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sections 549 to 557 (transactions with substantial donors), |
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section 558 (approved charitable investments), and |
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section 561 (approved charitable loans). |
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544 | Section 543: supplementary |
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(1) | This section applies for the purposes of section 543. |
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(2) | For rules about the calculation of losses, see— |
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(a) | section 26 of ITTOIA 2005 (losses of a trade calculated on same basis as |
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|
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|
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(b) | section 272 of that Act (which applies section 26 of that Act, so that |
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losses of a UK property business or overseas property business are |
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calculated on the same basis as profits), and |
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(c) | section 872 of that Act (losses from miscellaneous transactions |
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calculated on same basis as miscellaneous income). |
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(3) | A transaction is a miscellaneous transaction if it is of such a nature that, if |
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income or gains had arisen from it— |
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(a) | ignoring section 527 (exemption from charges under provisions to |
| |
which section 1016 applies), it would have been charged to income tax |
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under or by virtue of any provision to which section 1016 applies, and |
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(b) | the trustees of the charitable trust would have been liable for any tax so |
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(4) | References to a charitable trust making a loss in a trade in a tax year are to the |
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charitable trust making a loss in the trade in the basis period for the tax year. |
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545 | Section 543(1)(f): meaning of expenditure |
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(1) | For the purposes of section 543(1)(f) “expenditure” includes expenditure of a |
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(2) | None of the following is “expenditure” for those purposes— |
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(a) | the investment of any of the charitable trust’s funds, |
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(b) | the making of a loan by the charitable trust, or |
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(c) | the repayment by the charitable trust of the whole or a part of a loan |
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546 | Section 543(1)(f): tax year in which certain expenditure treated as incurred |
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(1) | This section applies for the purposes of section 543(1)(f). |
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(2) | Subsection (3) applies to expenditure which is referable to commitments |
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(whether or not of a contractual nature) that the charitable trust has entered |
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into before or during a tax year. |
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(3) | The expenditure is treated as incurred in the tax year if, had the charitable trust |
| |
been required to draw up accounts that met the requirements mentioned in |
| |
subsection (4), the expenditure would have been required to be taken into |
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account in preparing those accounts. |
| |
(4) | The requirements referred to in subsection (3) are— |
| |
(a) | that the accounts are drawn up for the tax year, and |
| |
(b) | that UK generally accepted accounting practice applies with respect to |
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547 | Section 543(1)(f): payment to body outside the UK |
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A payment made, or to be made, to a body situated outside the United |
| |
Kingdom is non-charitable expenditure under section 543(1)(f) if— |
| |
(a) | it is incurred for charitable purposes only, but |
| |
(b) | the trustees of the charitable trust have not taken such steps as are |
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reasonable in the circumstances to ensure that the payment will be |
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applied for charitable purposes. |
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