Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Trading Subsidiary definition

What does Trading Subsidiary mean? In practice, a trading subsidiary is a non-charitable company, usually limited by shares, wholly owned by a charity and used to carry on commercial (non‑primary purpose) trading while ring‑fencing risk from the charity. The expression is descriptive rather than statutory, though “subsidiary” is defined in the Companies Acts (UK 2006; Ireland 2014), and usage is broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland. Trustees typically establish a trading subsidiary where trading would exceed the small trading exemption, is not primary to the charity’s purposes, or presents material contractual, VAT or insolvency risk. The charity is the...

Lawyers’ guide to charity trading subsidiaries: structuring, financing, asset use, corporate gift aid, VAT, governance and risk (England and Wales)

Published by a LexisNexis Private Client expert

Practice notes

What is a trading subsidiary?

A trading subsidiary is a company owned and controlled by a charity, or occasionally by several charities, set up to carry on trade or business that:

the charity cannot itself pursue because of its constitution or concerns about commercial risk and potential liabilities; and/or
the charity cannot undertake in a tax‑efficient fashion.

Such companies are typically established to generate income for the charity or charities, as they are not subject to the same constraints on trading that apply to charities.

A trading subsidiary can be used to:

undertake non‑primary purpose trading beyond the small‑scale exemption limits (see the Tax treatment of the charity guidance note)
safeguard a charity’s assets from trading risks

If the subsidiary company transfers all or part of its profits to the charity (rather than paying a dividend) it will not be charged tax on those profits.

Trading subsidiaries are not inexpensive to operate and bring added bureaucracy and complexity, so they should not be formed without properly considering their benefits and drawbacks...

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Web page updated on 21/05/2026

Popular documents

Using the Judicial College Guidelines to assess general damages in personal injury claims

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

Tomlin orders in England and Wales: CPR guidance on drafting, confidentiality, approval, variation, enforcement, limitation, CCA issues, court-specific requirements, sample wording and precedents

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Precedent: Deed of Surrender of Lease with Optional Premium, Settlement and Release, Landlord, Mortgagee and Guarantor Consents, Reimbursement and HM Land Registry Provisions (England and Wales)

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

Precedent Statutory Declaration: Standard Wording under the Statutory Declarations Act 1835

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...