The following Trusts and Inheritance Tax guidance note by Tolley in association with Speechly Bircham LLP provides comprehensive and up to date tax information covering:
A 'trading subsidiary' is a company owned and controlled by a charity, or occasionally several charities, which has been incorporated in order to carry on a trade or business which:
A trading subsidiary is usually set up to generate income for the charity or charities, as the subsidiary does not have the restrictions to its trading activities that charities have.
A trading subsidiary can be used to:
If the subsidiary company gives all or part of its profits to the charity (in place of a dividend) then it will not pay tax on those profits, see the Gifting cash and assets to charity guidance note.
Trading subsidiaries are not cheap to run and generate additional bureaucracy and complexity and so should not be created without proper consideration of their merits and disadvantages.
If a charity wants to set up a trading subsidiary it will need to:
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