Charities and Corporation Tax

Setting up or running a charity in the UK is not an easy task. Apart from day-to-day management, one has to place undivided attention to the financial and compliance aspect too for it to run smoothly. Cutting corners here can lead to legal problems, tax compliance issues, and unwarranted hurdles. The good intention with which the charity was set up can soon become a burden. An area that needs special focus is reporting to the HMRC. With the recent adoption on IXBRL language, which is machine and human-readable, Charities have also had to ensure that they adhere to the new rules and create accurate financial reports.

To start, Charities that do not fall within corporation tax do not need to submit a company tax return and will not be involved with iXBRL. Charities that fall within corporation tax and are required to make a company tax return will have to do so online and follow a reporting protocol.

In 2016, Financial Reporting Council (FRC) and the Charity Commission (CC) came out with a new taxonomy dedicated to charities and their financial reporting. This was done to improve the quality and accessibility of the charities’ reports in the UK and Ireland.

Created in conjunction with the Statement Of Recommended Practice (SORP) (FRS 102), this taxonomy is still used to tag accounts for filing of financial reports electronically and other analytical requirements. Relevant observations and information can be extracted from corporate accounts and other financial decisions can be made basis an efficient analysis of the same.

The charity taxonomy’s content, style, and design is similar to the other existing taxonomies published by the FRC. Most other UK organizations are also required to use the IXBRL format to submit their accounts.

The taxonomy is intended to support iXBRL tagging of accounts which will meet the needs of a variety of users of financial reports, including:

Taxonomies – iXBRL Tags

  • For official requirements, government departments use this for business data that aids in policy and statistical formulations.
  • Tax authorities use the information from account submissions to help with tax risk analysis, policy-making decisions, and planning.
  • The Regulator (CC), Donors, information companies, banks, credit agencies, other charities, and the public may require financial data efficiently from Companies House and the Charity Commission.

There are no special exceptions to the use of this tagging system. This system has been updated through the years by HMRC such that it can also accept Company Tax Returns that have been tagged with this taxonomy.

If you run a charity with an income of over £6.5 million, you must include the charity taxonomy in your accounts. Some instances when this is applicable:

  • For accounts starting for a period on or after 1 January 2016
  • When submitted for Company Tax Return
  • If filed on or after 1 October 2016with, HMRC

If you own a charity and looking for the next course of action concerning your regulatory reporting needs, we are definitely what you’re looking for. At DataTracks, we have been helping charities with their compliance and reporting needs over the last decade. With us, you will get experienced professionals who are technically sound to handle any updated requirements of the HMRC. You can confidently leave your reporting need to us, while you continue to do good for the people. Write to us at

Read on to learn more about “Charity and Tax return filing in the UK”