A guide to third sector trading - WCVA

It’s an idea, but is it business? A guide to third sector trading
1: Getting
started
2: First steps 3: Business
planning
4: Legal and
governance
5: Funding
and
resourcing
6: Financial
controls
7: Managing
growth
8: Management
and
governance
9: Social
enterprise
10: Sources
of support
• Charitable rate relief: Rate relief can be a significant benefit for
small and marginal enterprises, but it is doubtful whether this
alone justifies charity registration. (See Section 7.5.)
− Local authorities are required by law to grant charities 80%
relief on their business rates, and have the discretion to grant
relief on the remaining 20% so that no rates are paid. Many
charities benefit from 100% relief, and if this is not automatic
in your area you should still make a case for it to your council.
− Premises, such as charity shops, whose sole income comes
from selling donated goods also enjoy the mandatory 80%
relief. The same benefit applies where the majority of income
is from the sale of goods even if a shop sells both donated and
purchased items.
− Some local authorities have also been persuaded to grant rate
relief on the premises of third sector trading organisations
even though they are not selling donated goods. It is worth
making the case to your local authority.
− Subsidiary trading companies which share premises with their
parent charity can also share the rate relief. But you should
check the situation with the local authority.
• Relief from Stamp Duty: Exemption from stamp duty applies to
any conveyance, transfer or letter to a charity – a small point to
bear in mind when acquiring property.
• Tax relief on private donations: Gift Aid arrangements can be a
real benefit to charities – see section 7.7.
• VAT: There are very marginal VAT benefits (for a few specific
types of trading) See Section 7.5.
• Public image: Being registered as a charity demonstrates that
the organisation is a charity in law and therefore subject to the
Charity Commission’s jurisdiction. This may help to create the
image of a reputable body. But not everyone will be impressed,
so this depends who you are dealing with.
• Standards of behaviour: Through its regulations and its
recommendations, the Charity Commission lays down standards
of good practice in operating public organisations, which
should, arguably, apply to any company which uses public
money or depends on the public for support. (This does not
mean, of course, that your company needs to be a registered
charity in order to have high standards, but it can help to keep
you on track.)
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