Charities and trading: guidance
What this Guide covers
In this Guide we look at the main ways a charity can trade and what charity trustees need to consider in terms of the charity test and charity trustee duties as set out in the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act).
This Guide is split into three sections:
Section 1: Types of charity trading
Section 2: Trading subsidiaries
Section 3: Charity trustee duties
This isn’t a comprehensive Guide to all the areas to consider with trading or with tax. We recommend that you take appropriate advice before starting any trading activity: see sources of help and advice below.
Who is the Guide for?
This Guide is aimed at charity trustees, and people working with trustees. It will also be useful to those applying to become a charity which intends to carry out trading.
How to use the Guide
The glossary provides you with further information, definitions and descriptions of some key terms. We have highlighted these key terms with links. Clicking on these terms will take you straight to the glossary or the relevant section of guidance. The Guide also contains many links to external websites for other sources of information.
The Guide is split into sections to help you find the information most relevant to you and your charity. As trading can be a complex area we suggest that you read the Guide in full at first to get a better understanding of the implications for your charity.
Sources of help and advice
OSCR publishes general guidance for charities, but we can’t provide specific advice on the full range of things which can happen in or affect your charity. These organisations can help with some or all of the areas set out in this Guide and more:
- For all tax matters see Her Majesty's Revenue and Customs (HMRC). The HMRC charity pages provide information and questions about tax issues relating to charities and charitable donations.
- The Charity Finance Group provides guidance which includes trading and tax.
- Local Third Sector Interfaces offer a range of support to voluntary organisations.
- The Scottish Council for Voluntary Organisations (SCVO).
- You may need to consult a professional advisor. The Law Society of Scotland may be able to help you identify a professional firm with expertise in charity law. There are various accountancy bodies such as the Institute of Chartered Accountants in Scotland or the Association of Chartered Certified Accountants that may be able to help you to identify a professional firm with expertise in charity accounting.
- The charity’s Auditor or Independent Examiner.
- If you are a Social Enterprise, see our Social Enterprise FAQs for more sources of advice.
- The Development Trusts Association Scotland is the national body for development trusts in Scotland, and can provide support and advice to its members.