Trustee Compliance
Does a Charity Need a UTR and a Tax Return?
Charities rarely owe tax on what they spend on their purposes, but that is not the same as having no UTR and no return. A charitable company holds a Corporation Tax UTR from the point it is set up at Companies House, and any charity must file when HMRC asks or when it believes it has tax to pay.
Most charities pay no tax on income used for charitable purposes, and trustees read that as no taxpayer record and nothing to file. The two questions come apart. Structure settles the first: a body incorporated at Companies House carries a ten digit Unique Taxpayer Reference from the start, whether or not it ever owes anything. Filing is settled by HM Revenue and Customs instead, and any charity must submit a return when it is asked or when the trustees believe there may be tax to pay. A company return is then due within 12 months of the accounting period end, a trust return by the following 31 January.
A charitable company has a UTR from day one, the others usually do not
The trigger for a UTR is setting up a limited company or registering for Self Assessment, not being a charity. It is a ten digit number, sometimes just called a tax reference. So the answer follows the structure:
- A charitable company gets a Corporation Tax UTR as part of being set up at Companies House, normally by post about a fortnight after registration. A lost one can be requested online, and HMRC sends it to the address registered with Companies House rather than anywhere else.
- A charitable incorporated organisation is a corporate body but is not registered at Companies House, so nothing arrives automatically. It sits inside the corporation tax rules all the same, and the reference follows once HMRC opens a record, which in practice means when the charity makes contact or a return is first needed.
- A charitable trust or an unincorporated association has no company record at all. A trust works through Self Assessment, an association through corporation tax, and in both cases the reference appears only when HMRC first needs a return.
Holding a UTR is not itself an obligation to file. A charity can hold one for years without a return falling due.
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No, the HMRC charity reference number is a different number
Recognition as a charity for tax purposes is a separate application from registration with the Charity Commission, and it produces a unique charity reference number from HMRC. That is the number a Gift Aid claim is made under. The UTR sits on the returns side. A charitable company routinely holds both, and quoting one where the other belongs is a common reason a claim comes back unprocessed. The difference between the two registrations is set out in HMRC recognition versus Commission registration.
A return is due when HMRC asks, or when the trustees think tax may be owed
All charities are within the self assessment legislation and must submit a return if either they are asked to do so or they believe they may have tax to pay. Some charities are sent a formal notification every year; most are asked only occasionally. There is no annual charity tax return in the way there is an annual return to the Commission.
The trustees' own judgement is half the test, which is why the question is worth revisiting at each year end rather than waiting for post. Two situations put tax on the table:
- Income that does not qualify for relief. Non primary purpose trading is the usual one. It is exempt only while turnover stays inside the small trading limits, and those limits step up with the charity's gross income: the ceiling is £8,000 up to £32,000 of gross income, then 25% of gross income, then a flat £80,000 once gross income clears £320,000. Break the ceiling and the trade's whole profit falls into charge, not merely the slice above it. Where the trade is never going back under, a subsidiary is the structure that fixes it, as the trading subsidiary route explains.
- Income spent on non charitable purposes. Expenditure outside the charity's purposes, and investments or loans outside the approved categories, can restrict the exemption on income that would otherwise have been clear.
Grant makers and endowment holders meet the second more often than the first, because the money sits in investments rather than a shop. A specialist reads the portfolio and the grant list against the approved categories before the trustees conclude there is nothing to declare.
Trusts file an SA900, every other charity files a CT600
| Charity structure | Return | Charity supplementary page | Filing deadline |
|---|---|---|---|
| Trust | Trust and Estate Tax Return, form SA900 | SA907 | 31 January after the end of the year of assessment, filing online |
| Company, CIO, association | Company Tax Return, form CT600 | CT600E | Within 12 months of the end of the accounting period |
The supplementary pages must always be completed alongside the main return, and the CT600E is the claim itself: it states that the charity's income and gains have been applied for charitable purposes only, which is what secures the exemption. It asks for the company's ten digit UTR. Where it confirms that everything is exempt, no computation is needed with it. Annual accounts go in alongside the Company Tax Return.
A late return brings a penalty even where no tax was owed
Failure by a company or a trust to file the required return, including the charity supplementary pages and the accounts where these are required, by the filing date results in a penalty charge. A charity can appeal where it has a reasonable excuse. The awkward case is the nil return that nobody expected: a notice to file arrives, the trustees see no tax to pay and set it aside, and a penalty follows for a filing that would have cost nothing.
Claims run on their own clock. The window is four years, counted from the end of the tax year where the charity is a trust, and from the end of the accounting period for every other charity and for a CASC. A charity that has drifted out of contact with HMRC loses claims quietly long before anyone chases it for a return.
A UTR and a return are the direct tax picture only
Three things sit outside it. VAT is a separate registration with its own threshold and its own reliefs, and no charity is outside the VAT system simply for being a charity, which the VAT position sets out. Payroll is a third registration again, needed as soon as anyone is paid. And none of it reaches a community interest company, which sits outside the charity definition the tax Acts use, pays corporation tax in the ordinary way and claims no charitable exemption, as the CIC comparison shows.
What to check before you decide there is nothing to file
- Establish the structure, since it decides whether a UTR already exists and which return would apply.
- Locate both numbers and confirm HMRC holds current trustee and address details.
- Test the year for non exempt income and non charitable expenditure, before deciding there is nothing to file.
- Reply to any notice to file by its deadline, exempt or not.
- Check what is still inside four years and claim it.
Step three is the one trustees skip, and it is the only step that can produce a bill. Our charity accounts page covers the returns and the accounts behind them.
Frequently asked questions
- Does a small charity need a UTR?
- It depends on the structure, not the size. A charitable company is registered at Companies House at the point it comes into existence and holds a ten digit Unique Taxpayer Reference from then on, however small its income. A charitable incorporated organisation, an unincorporated association or a charitable trust has no Companies House record, so it usually acquires a UTR only when HMRC opens a record for it, which in practice means when a return is first required.
- Is our HMRC charity reference number our UTR?
- No, and mixing the two is the most common reason a claim or a return goes to the wrong place. The charity reference number comes from recognition as a charity for tax purposes and is what a Gift Aid claim is made under. The UTR is the taxpayer record for returns. A charitable company can easily hold both at once, and each is quoted on its own forms.
- We have never had tax to pay. Do we still have to file?
- Only if HMRC asks or if the trustees think there may be tax due. All charities sit inside the self assessment rules, so a notice to file has to be answered even where the answer is that everything is exempt. Some charities are notified every year and most are asked occasionally. Ignoring a notice because there is no tax to pay is what turns a nil return into a penalty.
- What is the CT600E and why does it matter to a charity with no tax?
- It is the charity supplementary page to the Company Tax Return, and it is the claim rather than a cover sheet. A charity uses it to declare that everything it received and every gain it made went to its purposes alone, and that declaration is what secures the exemption. The page wants the company's ten digit Unique Taxpayer Reference, and a year shown as wholly exempt needs no computation attached to it.
- What could actually give a grant making charity a tax bill?
- Two things, most often, and neither of them looks like trading. The first is investment or loan activity that falls outside HMRC's approved categories, which restricts the exemption on income that would otherwise have been clear. The second is money spent on something that is not one of the charity's purposes, which does the same damage from the other end. For a grant maker the exposure therefore turns up in an investment review rather than on a trading page.
- How far back can we still claim?
- Four years, and which four years depends on the structure: a charitable trust counts from the end of the tax year, and every other charity and every CASC counts from the end of the accounting period. That window is the reason a dormant looking charity should still keep its reference numbers current: the claim it has not yet made is the thing with a deadline, not the return it has not been asked for.
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