One of a series of articles on Ringing and Money by Steve Coleman

Someone’s just told me that now we’ve passed April 2006, all Ringing Associations and all Tower Funds should be paying tax. Is this really true?


Well, it’s partly true. Not all Ringing Associations and tower funds should be paying tax – indeed not even most Ringing Associations and tower funds should be paying tax – but some certainly should, and here’s how to work out whether yours is one of them.

The Charities

So first off, if your Ringing Association or tower fund is registered as a charity, you’re definitely OK. Unless it engages in trading activities on a pretty grand scale – in which case you’ve probably already sorted things out by having a special subsidiary trading company – HM Revenue and Customs won’t want to be bothered with you at all. Your only contact with them will be when you reclaim tax on membership subscriptions and donations.

Of course, very few tower funds are independently registered as charities, but as long as your tower fund is in reality a restricted fund in the PCC accounts, it’s part of a charity and that’s OK.

The Change

And that leaves the rest. In law, Ringing Associations and groups of ringers with a tower fund that’s not under the control of the PCC, are what’s known as unincorporated associations and so subject to corporation tax. Until April 2006 that was no problem because the first £10,000 of taxable profits were chargeable at 0%, and so no Ringing Associations or tower funds were wealthy enough to pay tax.

But since April 2006 all profits are chargeable to corporation tax, no matter how small. What’s more, until this April – 2007 – they were chargeable at the rate of 19%. Now they’re chargeable at 20%, and more increases are promised for the future. So on the face of it, all non-charity Ringing Associations and tower funds are caught if they make profits.

Small Societies

But when the 2006 Finance Bill was being debated in parliament, lots of MPs became rightly concerned about the plight of small societies. So the Revenue renewed from earlier times what’s called, a concession. A concession is something that’s not actually law but is nonetheless as good as. It’s written down in black and white and formally published, and the Revenue have to act as though it were law.

This particular concession says that as long as the tax theoretically payable by a society is less than £100, the society need not fill in a Tax Return or pay the tax.

That’s good, but the society does need to notify Revenue and Customs of its existence and then confirm every five years – when asked – that things haven’t changed.

What are Profits?

But could the tax bill of your Association or tower fund be over £100?

Well, it could be. A quick calculation shows that last tax year you will need to have achieved profits of more than £526 in order to have had a liability of more than £100 tax – and this year you will need only to achieve profits of £500. But that still leaves the question: what on earth gets included as profits?

Well, fortunately this is simpler than you might think. First, all subscriptions and donations received by the Association must be left out of account. And second, all the normal expenditure of the Association must be left out of account too.

Put simply, if you just collect subs and pay running expenses, you have neither a profit nor a loss for tax purposes no matter how healthy the bottom line of your accounts. So even if you’ve made a £1,500 surplus on your subs, the taxman isn’t interested.

But if you’ve received interest, that’s another matter. All the interest credited to your deposit accounts in the year – which, incidentally, should be credited gross – counts as taxable profits no matter what you do with it. Similarly, all the profits you make on that part of your trading activities which involve providing goods or services to non-members, are also taxable profits.

Where you trade with both members and non-members – by selling tea towels, for example – in strictness you should apportion your takings and costs between the two lots of sales. For many Associations and tower funds the sales to non-members will be so tiny as to be hardly worth bothering about, but for some it will be very significant.

And in case you’re wondering, trading activities include book sales, training courses, skittles evenings, table sales, open days and all other fund raising activities in which people get something in return for making payments. Most importantly, if you have an Association with several Branches, all the interest and all the non-member trading profits of all the Branches must be added together when calculating if you’ve passed the £500 limit. The Branches aren’t separate entities.


But does that mean you can organise a skittles evening that costs the Branch £10 a head, charge all your members £5 a head, and then claim you’ve made a loss that you can set against your other profits?

Unfortunately, no. Giving benefits to members doesn’t result in an allowable loss for tax purposes no matter what. It’s the same with subsidised training courses. But if you genuinely set out to make a profit from nonmembers, and then make a loss due to force of circumstance – such as bad weather, national mourning or simple incompetence – that loss is indeed an allowable loss and you can deduct it from your profits for tax purposes.


As I said earlier, donations don’t count, so if a tower provides an AGM ringing tea and then gives the profit to the Branch, that profit isn’t taxable. But if the Branch provides the tea and then keeps the profit, a little of it is taxable. So if you’re getting near that £500 and want to be absolutely punctilious, make sure you arrange things the right way round.

Equally, if the limit might be breached, don’t let your members provide free food and drink at fund-raising barbecues. Get them to charge and then donate the money back again if they want to.

For Charity

But not all trading is intended to benefit the Association. Many Ringing Associations that aren’t charities, organise fund raising events to benefit an organisation that is a charity. Typically, they arrange a barbecue or tower open day with the profits going to their separately registered belfry repair fund.

Tax-wise I’m not keen on this as the belfry repair fund loses the Gift Aid advantage, but from the corporation tax standpoint, you’re OK. Profits made from an event specifically organised to raise money for a charity, don’t count.

On Loan

But supposing you’ve sorted out all these details yet your profits are still likely to be over £500 because you have so much money on deposit?

Well, year on year, there’s a simple way out. A Ringing Association can lend its accumulated money to its belfry repair fund interest free, and a tower fund can lend its accumulated money to its PCC interest free.

But if you’re going to do this, it definitely needs to be done with a proper loan agreement signed by both parties so that you can get the money back when you want it. And of course, you can’t do it retrospectively no matter how tempting that is.

And Lastly

But if, after all that, you arrive in the last month of the accounting year and you realise you’ve made too big a profit, don’t despair. As long as you act immediately you can still wipe the slate clean. And that’s because Associations and tower funds can make Gift Aid donations too.

Gift Aid doesn’t work quite the same way for Associations and tower funds as it does for individuals but it’s just as effective. You don’t need to make a declaration in the way that an individual does, and you don’t make your donations net with the charity claiming back the tax. Instead, you simply pay an amount over and then treat that amount as though it were an allowable expense in calculating your profits. But – and this is a vitally important but – you must make the donation before the end of your accounting year.

Companies owned by charities can make their Gift Aid payments up to nine months late, but Ringing Associations and tower funds can’t. So as long as you’re in time, just give the excess profits over £500 to your BRF or – if you’re a tower fund, to your PCC – and that will be that.

Of course, if you simply can’t bear to give any money away at all, that’s fine. Just fill in the Tax Return, pay up the tax … and smile!

BB BellBoard
Central Council of Church Bell Ringers