Red tape reprieve

Sports clubs have something to cheer about following a decision to change their tax status. Many local clubs and associations were caught by tax rules designed primarily for larger commercial businesses.

This year's Finance Act removed the 0% starting rate for corporation tax from 1 April 2006 which left clubs liable to pay tax on very small amounts of income, besides having to complete a lengthy tax return.

Revenue & Customs has now relented and will only require a tax return if the corporation tax liability is over £100. In most cases that translates to approximately £525 of income.

Linda Warner, tax director at the Guildford office of Smith & Williamson, said: 'This reprieve is very good news for the numerous clubs and societies in the area. For many, their only relevant income is from tiny amounts of bank interest - until the taxman amended the rules, they would have had to deal with a considerable administrative burden for very little purpose.'

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