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Corporation tax for clubs

Autumn 2006 Taking Account

HM Revenue & Customs (HMRC) has confirmed that clubs and small unincorporated associations do not have to complete corporation tax returns if their annual tax bill is expected to be £100 or less.

Concern had arisen following the abolition of the nil rate of corporation tax from 1 April 2006 that clubs with very small amounts of bank interest would have to pay tax. The HMRC practice existed informally before the introduction of the nil tax rate but has now been made public.

To come within the scope of this concession, a club must be run exclusively for the benefit of its own members and not as a commercial enterprise.

Property management companies are similarly relieved from the duty to make tax returns if they only exist to manage property on a nonprofit basis for the owners or tenants, are themselves owned only by the property's owners or tenants, do not receive income from property and do not pay dividends.