What is a trading subsidiary?
A trading subsidiary is a separate legal company set up and owned (usually wholly) by an academy trust to carry out commercial activities on its behalf.
Typically the subsidiary is structured as a company with profits transferred back to the trust through mechanisms such as Gift Aid. This means that funds ultimately support the trust’s educational mission.
A trading subsidiary allows trusts to
- Deliver services or sell products externally
- Generate additional income
- Manage financial and legal risk outside the core charity
Why consider setting up a trading subsidiary?
For example, if your trust has developed excellent systems for finance and procurement, and you have the talent and capacity to do so, you can