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HMRC internal manual

Business Income Manual

Meaning of trade: mutual trading and members clubs: allocation of income: introduction and layout of guidance: contents

A mutual trader often has income from outside the ‘circle of mutuality’. Where such profits arise from the carrying on of a trade they are taxable as trade profits.

The following paragraphs provide guidance on how to allocate the income received by the mutual trader between:

  • non-taxable dealings with contributors, and
  • taxable dealings with non-contributors.

There are some categories of receipts (for example television or sponsorship income) that derive entirely from non-contributors. There are some receipts that derive entirely from contributors (for example income from a members’ only facility). And there are some receipts that derive partly from contributors and from non-contributors - for example takings from a facility available both to members and non-members.

You will need to establish the underlying facts to allow an allocation of income between taxable (non-mutual) and non-taxable (mutual). Under no circumstances can losses relating to the mutual trade be set against profits derived from the non-mutual trade.

The following guidance covers: