We have updated OSCR Online - click here for more information on how to submit your annual return

Charities and Trading Guide

Published: 26/03/2018
Updated: 26/03/2018


Download the full PDF version of the Guidance or browse individual sections.

Download the word version.

Download the large print version (point 18 font).

What this Guide covers

In this Guide we look at the main ways a charity can trade and what charity trustees need to consider in terms of the charity test and charity trustee duties as set out in the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act).

This Guide is split into three sections:       

Trading Structure

Section 1: Types of Charity Trading

          1.1    What is trading?

          1.2    Primary purpose trading

          1.3    Ancillary trading

          1.4    Non-primary purpose trading

          1.5    What doesn’t count as trading?

          1.6    Tax exemptions and reliefs

Section 2: Trading Subsidiaries

          2.1    What is a trading subsidiary?

          2.2    When should a charity set up a trading subsidiary?

          2.3    What do you need think about?

          2.4    Setting up a trading subsidiary

  2.5    Managing the relationship between the charity and trading subsidiary

Section 3: Charity Trustee Duties  

  3.1    Does trading advance the charity’s purposes and provide public benefit?

  3.2    Does the charity’s governing document allow the activity?

  3.3    Is trading in the interests of the charity?

  3.4    Are the charity trustees acting with care and diligence? 


This isn’t a comprehensive Guide to all the areas to consider with trading or with tax. We recommend that you take appropriate advice before starting any trading activity: see sources of help and advice below


Who is the Guide for?

This Guide is aimed at charity trustees, and people working with trustees. It will also be useful to those applying to become a charity which intends to carry out trading. 


How to use the Guide

The glossary provides you with further information, definitions and descriptions of some key terms. We have highlighted these key terms in bold purple type. Clicking on these terms will take you straight to the glossary or the relevant section of guidance. The Guide also contains many links to external websites for other sources of information.

The Guide is split into sections to help you find the information most relevant to you and your charity. As trading can be a complex area we suggest that you read the Guide in full at first to get a better understanding of the implications for your charity.


Sources of help and advice

OSCR publishes general guidance for charities, but we can’t provide specific advice on the full range of things which can happen in or affect your charity. These organisations can help with some or all of the areas set out in this Guide and more: