Income Tax Act 2007

528 Condition as to trading and miscellaneous incoming resources

(1) The condition in this section is met in relation to a tax year if—

(a) the sum of the charitable trust’s trading incoming resources and miscellaneous incoming resources for the tax year does not exceed the requisite limit for the tax year, or

(b) the trustees of the charitable trust had, at the beginning of the tax year, a reasonable expectation that it would not do so.

(2) The charitable trust’s “trading incoming resources” for the tax year are—

(a) the incoming resources which are required to be taken into account in calculating the profits of, or losses made in, the basis period for the tax year of any non-exempt trade carried on by the charitable trust, and

(b) the incoming resources which are treated as adjustment income under section 228 of ITTOIA 2005 in respect of such a trade, or which are post-cessation receipts arising from such a trade.

• “Post-cessation receipt” has the meaning given by section 526(7).

(3) For the purposes of subsection (2) a trade is a “non-exempt trade” if any profits of the trade would not, apart from section 526, be exempt from income tax chargeable under Part 2 of ITTOIA 2005.

(4) The charitable trust’s “miscellaneous incoming resources” for the tax year are the incoming resources which are required to be taken into account in calculating non-exempt miscellaneous income or non-exempt miscellaneous losses for the tax year.

(5) In this section—

• “non-exempt miscellaneous income” means income or gains chargeable to income tax under or by virtue of any provision to which section 1016 applies that is not, or are not, apart from section 526 or 527, exempt from income tax chargeable under or by virtue of that provision, and

• “non-exempt miscellaneous losses” means losses arising from a transaction which is of such a nature that if income or gains had arisen from it the income would have been non-exempt miscellaneous income.

(6) The requisite limit—

(a) is 25% of the charitable trust’s total incoming resources for the tax year, but

(b) must not be less than £5,000 or more than £50,000.