Part 10Special rules about charitable trusts etc

Approved charitable investments and loans

558Approved charitable investments

F1(1)

For the purposes of section 543 “approved charitable investment” means an investment—

(a)

that is of a type listed in subsection (2) and is made for an allowable purpose, or

(b)

that is not of a type listed in subsection (2) but that is approved under subsection (3).

F2(2)

F3The following are the types of investment mentioned in subsection (1)(a)—

  • Type 1

    An investment to which section 559 applies.

  • Type 2

    An investment in a common investment fund established under—

    1. (a)

      section 22 of the Charities Act 1960 (c. 58),

    2. (b)

      section 24 of the Charities Act 1993 (c. 10),

    3. (bb)

      F4section 96 of the Charities Act 2011, or

    4. (c)

      section 25 of the Charities Act (Northern Ireland) 1964.

  • Type 3

    An investment in a common deposit fund established under—

    1. (a)

      section 22A of the Charities Act 1960, F5...

    2. (b)

      section 25 of the Charities Act 1993 F6or

    3. (c)

      section 100 of the Charities Act 2011.

  • Type 4

    An investment in a fund which—

    1. (a)

      is similar to a fund mentioned in relation to Type 2 or 3, and

    2. (b)

      is established for the exclusive benefit of charities by or under a provision relating to any particular charities or class of charities contained in an Act.

  • Type 5

    An interest in land, other than an interest held as security for a debt.

  • Type 6

    Any of the following issued by Her Majesty's Government in the United Kingdom—

    1. (a)

      bills,

    2. (b)

      Certificates of Tax Deposit,

    3. (c)

      Savings Certificates, and

    4. (d)

      Tax Reserve Certificates.

  • Type 7

    Northern Ireland Treasury Bills.

  • Type 8

    Units in a unit trust scheme (as defined in section 237(1) of FISMA 2000) or in a recognised scheme (as defined in section 237(3) of FISMA 2000).

    “Units” is defined in section 237(2) of FISMA 2000.

  • Type 9

    A deposit with a bank (as defined in section 991)—

    1. (a)

      in respect of which interest is payable at a commercial rate, and

    2. (b)

      which is not made as part of an arrangement under which a loan is made by the bank to some other person.

  • Type 10

    A deposit with—

    1. (a)

      the National Savings Bank,

    2. (b)

      a building society, or

    3. (c)

      a credit institution which operates on mutual principles and which is authorised by an appropriate governmental body in the territory in which the deposit is taken.

  • Type 11

    Certificates of deposit (including uncertificated eligible debt security units as defined in section 986(3)).

  • F7...

F8(3)

An officer of Revenue and Customs may approve a loan or other investment under this subsection if satisfied, on a claim, that it is made for an allowable purpose.

(4)

For the purposes of this section an investment is made “for an allowable purpose” if it is reasonable to draw the conclusion, from all the circumstances of the case, that the investment is made—

(a)

for the sole purpose of benefiting the charitable trust, or

(b)

for that purpose and one or more ancillary or incidental purposes,

and is not made for the avoidance of tax (whether by the trust or any other person).