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HMRC internal manual

Business Income Manual

Meaning of trade: Mutual trading and members clubs: mutual associations: specific activities: voluntary organisations and charities: donations etc. not chargeable

Where profits arise to a voluntary organisation or a charity from activities that do not satisfy the conditions in BIM24794, such as weekly dances organised to raise funds to build a village community centre, the taxable profits should be limited to the profits computed on a commercial basis. Any donations should accordingly be excluded from receipts. And if a hall or room, or the services of officials, are obtained free (or at reduced rates), you may deduct (in arriving at the profits to be assessed) an amount to give the equivalent deduction to the commercial value of the facilities or services so obtained (see the remarks of the Lord President in British Legion, Peterhead Branch, Remembrance and Welcome Home Fund v CIR [1953] 35TC509).

For further guidance on this see BIM24475.