Unincorporated organisations and Corporation Tax
Generally, companies are liable to Corporation Tax on their taxable profits.
Some members' clubs, associations, societies, Community Amateur Sports Clubs (CASCs), and other unincorporated organisations may also be liable for Corporation Tax.
This page should help you decide if your club or other organisation is liable for Corporation Tax and what you need to do if it is.
It will also help you work out if your organisation or any of its activities are exempt from Corporation Tax.
On this page:
- Community Amateur Sports Clubs (CASCs)
- Corporation Tax for unincorporated organisations
- More useful links
What are CASCs?
CASCs are sports clubs that are registered with HM Revenue & Customs (HMRC).
Are CASCs liable for Corporation Tax?
Sports clubs are liable for Corporation Tax on their profits but may qualify for tax relief to reduce their Corporation Tax bill. There are also other reliefs that clubs may be able to claim.
Additionally, some CASC activities are exempt from Corporation Tax. Provided that the income and/or gains generated by your CASC are used only for what's known as a 'qualifying purpose'. Generally, a qualifying purpose is providing facilities for eligible sports and encouraging people to take part in them.
In addition CASCs are exempt from Corporation Tax on:
- turnover less than £30,000
- income from property less than £20,000
- any interest income
- any chargeable gains
What to do if your CASC is liable for Corporation Tax
If your CASC is liable for Corporation Tax, it's normally subject to Corporation Tax deadlines and requirements. These include telling HMRC that it's liable, paying any Corporation Tax due and filing a Company Tax Return on time.
The following unincorporated organisations are generally subject to Corporation Tax deadlines and requirements:
- members’ clubs, such as social clubs and holiday clubs
- societies, such as friendly societies and provident societies
- associations, such as housing associations and trade associations
- other unincorporated associations
The taxable profits or surpluses of these organisations are subject to Corporation Tax.
If your unincorporated organisation is liable for Corporation Tax, it's normally subject to Corporation Tax deadlines and requirements.
Unincorporated organisations with small tax liabilities
HMRC may treat some clubs and unincorporated organisations with very small tax liabilities, (collectively known to HMRC as 'small clubs'), as dormant for Corporation Tax purposes.
To qualify, both of the following must apply:
- your organisation's annual Corporation Tax liability must not be expected to exceed £100
- you run your club or organisation exclusively for the benefit of its members
If both these statements apply, HMRC will not send you a 'Notice to deliver a Company Tax Return' and will treat your organisation as dormant. They will review this at least every five years.
Additionally, and for each year your club or organisation is treated as dormant, it must not have any:
- trading losses available for offsetting against profits
- chargeable gains or disposals
- anticipated payments from which tax is deductible and payable to HMRC, for example if your club is an employer and is responsible for deducting and paying over the PAYE tax to HMRC
What organisations are not covered by this exemption?
Most clubs and unincorporated organisations with very small tax liabilities are covered by the exemption except for the following:
- privately owned clubs run by the members as a commercial enterprise for personal profit
- housing associations or registered social landlords (as designated in the Housing Act 1986)
- trade associations
- thrift funds
- holiday clubs
- friendly societies
- companies which are subsidiaries of, or are wholly owned by, a charity
Property Management Companies
HMRC may apply this treatment to your property management company if, as well as meeting all the criteria laid out in the previous sections, it meets all of the following additional criteria:
- Your company's business consists of the management, on a non profit making basis, of a block(s) of flats or apartments for the owners, lessees or tenants of the flats or apartments.
- Your company's Articles of Association ensure that only people who have an interest in the managed property own the company's shares.
- Your company must not be entitled to receive any income from land.
- Your company can't pay dividends or make any other distribution of profit.
But if your property management company receives service charges which it must hold on trust for its tenants, it will be liable to Income Tax on any interest that arises on that fund. In effect, your company is acting as a trustee and may be required to deliver a tax return to the relevant HMRC Trust Office.
Income from service charges for UK properties that's held on trust is chargeable at the standard tax rates. For example, basic rate in the case of bank interest as trustees are not entitled to starting rate for savings income.
Generally, where the income is below £1,000 and taxed at source, you won't need to complete a return every year.
What to do if your organisation is treated as dormant
Most existing organisations and property management companies that meet the necessary conditions for this exemption will already be treated as dormant by HMRC. If your organisation isn't and you think it should be, contact your Corporation Tax Office.
If you've already received a letter from HMRC to say your organisation is to be treated as dormant, you don't need to contact HMRC until the end of the dormancy period. But you must contact your Corporation Tax Office immediately if your organisation no longer meets any of the conditions set out in the letter or undergoes a change that may affect its tax position.