Students Staff

Use of subsidiary companies

The University is an educational charity. As a charity it gains certain advantages and accepts certain obligations. The advantages include exemption from VAT on fees charged to students and exemption from Corporation Tax on any profits from its charitable activities, provided that these are applied for charitable purposes.

Some of the above matters have recently been substantially amended and clarified through:

The extent to which the University can undertake non-charitable activities is significantly constrained both by charity law and by tax considerations. Charity law requires the University to apply its funds solely for charitable purposes. In particular, it must not engage in non-charitable trading involving significant risk of loss. Corporation Tax liabilities are likely to arise where non-charitable trading is profitable, and can also arise where non-charitable trading is loss-making (because they imply non-charitable use of profits from charitable activities).

For these reasons, the University has wholly-owned subsidiary companies, through which it channels certain non-charitable activity. These companies are not charities but can avoid Corporation Tax by paying any profits to the University as Gift Aid. This is a model used by many universities and its use has been endorsed by HM Revenue & Customs.

The University has several subsidiary companies, some active and some dormant, details of which can be found on the Group Structure Chart:

The Charity Commission has the following guidance for trading subsidiaries which can be found here: