Do charities pay Corporation Tax or need to file a tax return?

1. Exemption depends on the income and its use

Short version. Charity status does not exempt every receipt automatically. HMRC recognition, the relevant exemption and use for charitable purposes matter. Income outside relief or expenditure for non-charitable purposes can leave tax to pay. See HMRC charities and tax.

Primary-purpose trading and some small non-primary-purpose trades can qualify. The small trading limit is normally £8,000, or 25% of total annual income if greater, capped at £80,000. Check all conditions and the treatment of short periods in HMRC trading guidance. These limits are guidance, not a tax calculation made by the filing service.

2. A notice to file still needs a return

A charity must respond to HMRC’s formal notice even if no tax is due. It must also notify HMRC if it believes it has a tax liability. Charitable companies use a Company Tax Return and CT600E. Charitable trusts use the appropriate Self Assessment return. The Company Tax Return normally falls due 12 months after the accounting period ends. HMRC explains notices, annual accounts and deadlines.

3. Full and partial exemption are different

CT600E E20 declares full exemption and charitable use. E25 applies where some income or gains may not be exempt or were not used only for the qualifying purposes. A partly exempt return needs the taxable amounts on the CT600 and the relevant computation. Do not choose full exemption merely because the final tax is nil.

For a full exemption claim, HMRC does not require a computation. Annual accounts still accompany the return. Smaller charities can use PDF accounts where combined income with wholly owned subsidiaries does not exceed £6.5 million. Above that, use iXBRL. See HMRC’s electronic filing requirements.

The available CT600E filing route covers incorporated charities claiming full exemption only. It does not calculate whether an exemption applies. This is general guidance, not tax advice.