Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Charity definition

What does Charity mean? In practice, a charity is an organisation established solely for charitable purposes to deliver public benefit, with assets held for those purposes and supervised by the courts and charity regulators. Common forms include a trust, unincorporated association or company limited by guarantee (including CIO/SCIO). Surpluses cannot be distributed to members; funds must be applied to the purposes. Political activity is permitted only as ancillary. Status determines regulatory duties and eligibility for charity tax reliefs. England and Wales: Charities Act 2011, s 1, defines a charity as an institution established for charitable purposes only and subject to High Court control;...

Charity trustees’ investment powers and duties (England and Wales): distinguishing trading from investment, suitability, diversification and advice, ESG and cryptoassets, under the Trustee Act 2000 and Charities Act 2011

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Practice notes

Investment and trading

Charities draw income in various ways, and it is essential to separate investment from trade. At times the boundary is hard to spot, particularly with land. If a Charity buys land intending to let it for rent, that amounts to an investment, as the aim is to produce rental return. By contrast, purchasing with a view to resale—perhaps for development—at an enhanced price places them in trading, because the profit on disposal is the objective. Some may say that, while the land is held, it effectively operates as an investment and only becomes trading property when it is sold, but that characterisation is unreliable where the real plan is to sell on at a higher price...

The deciding factor is the charity’s original intention at acquisition. As stated in Trustees of BT Pension Schemes & Others v Clark (HM Inspector of Taxes), where the legal or commercial features of a transaction clearly indicate trading, the trader’s personal aims or motives do not alter its nature. Put another way, objective attributes carry greater weight than subjective purpose, so a deal that unequivocally points to trading will be treated as trading, regardless of how it is described internally...

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Web page updated on 28/05/2026

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