Changes to the Charity Tax Return

Many charities are required to file a tax return. Some are required to do so because their non-primary purpose trading income exceeds the small trading exemption limits, whilst others may receive a notice to file from HMRC. In either case, where a registered charity or Community Amateur Sports Club (CASC) submits a corporation tax return, form CT600E must also be completed.

HMRC have recently updated this form, introducing two key changes that will affect charities when completing future tax returns.

• New Category for Legacy Income

One welcome change is the introduction of a specific income classification for legacy income. Historically, income is required to be disclosed broadly based on the different tax exemptions available.

From April 2026, legacy income (gifts left in wills to charities and CASCs) must be applied for charitable purposes in order to remain exempt from tax. It’s therefore not surprising that this is now required to be reported on its own section of the CT600E.

For many charities, especially those that rely heavily on gifts in wills, such as hospital and hospice charities, this should provide greater clarity when preparing the form. HMRC has provided updates on the guidance notes accompanying the CT600 to help clarify the treatment of different income sources.

• Additional Information Requirements

The more significant change relates to a new section requiring details of individual legacies received by a charity. This appears to request information including the donor’s name, address, date and value of legacy.

Whilst HMRC has introduced the requirement, there appears to be little explanation as to why this is needed or how it will be used.

This leaves charities with a number of practical questions:

• • What date should be reported where a legacy is received in multiple instalments?
  • Should accrued legacy income be included, or only amounts received during the period?
  • How should charities deal with incomplete information?
  • What additional administration will be required to gather and retain these details, ready for reporting?

Is there an alternative?

HMRC’s guidance appears to provide an alternative approach. It suggests where charities are unable, or choose not to provide details of individual legacies, they may instead include a single combined entry for the total legacy income received. This raises questions about the purpose of collecting the additional information and whether the detailed disclosure will become a practical requirement in the future.

Until further clarification is provided, some uncertainty remains whether trustees should invest time in collating data that may not be required.

What to do?

For now, charities should familiarise themselves with the updated requirements. They should also consider whether existing processes would enable the requested information to be captured if required.

The charity sector has worked hard in recent years to improve compliance whilst keeping administrative burdens proportionate. This was solidified again recently with the new tiered reporting system within the new Charities SORP 2026.

This will likely remain a topic of discussion amongst those within, and working with, charities until further guidance is issued. Our dedicated charity specialists will remain close to this topic and post updates as they arise.

Information correct at the time of writing.