A leading private hospital, the London Clinic, receives an estimated £4m in tax breaks because it is a registered charity but spends less than a tenth of that sum on charitable activity, research has uncovered.

The figures are revealed in a forthcoming report produced by a research and training charity, the Directory of Social Change (DSC), which examines the charitable status of major independent hospitals. The study looked in detail at the London Clinic and the Nuffield Hospitals Group, the country's third largest independent healthcare company.

More than a third of Britain's private healthcare sector is made up of charities, which receive millions of pounds in tax breaks each year.

But their status is under threat from new charities legislation, now being scrutinised by a parliamentary committee, which ministers have promised will force charities that charge high fees to prove they offer a "public benefit".

The charities minister, Fiona Mactaggart, has pledged that the public benefit test will apply to private schools and hospitals with charitable status.

Although she expected many schools to pass the test, she has warned that the future charitable status of private healthcare providers such as Nuffield and the London Clinic were "the biggest question".

The 199-bed London Clinic, the second-largest hospital in the UK in financial terms, has a turnover of more than £60m. In 2002-03, it retained a £6.9m surplus - substantially higher than the estimated tax concession.

The DSC report estimates that the hospital gains more than £4m a year in tax concessions because of its charitable status, but its annual report showed that just £354,000 - 9% of the tax break - was set aside in "charitable discounts".

The clinic charges a daily room rate of between £450 and £1,200, "at the most expensive range of care available" in Greater London, the DSC research noted. But it is not clear from the clinic's annual report whether or not the "charitable discounts" are used to subsidise treatment for those who cannot afford the commercial prices.

Although the recipients of the "charitable discount" for 2002-03 were not detailed, the Anthony Nolan Bone Marrow Fund received 67% of the money in 2000, and 38% in 1999. The DSC report concludes: "The amount given in free or discounted care is therefore likely to be slight."

The clinic used to run a free-treatment Diamond Jubilee Fund for a limited number of patients each year, but this closed in 2003. The DSC report says: "Even if this fund had continued ... the sums given for free treatment of patients seem relatively insignificant and unlikely to have met a sufficient level of public benefit" to pass the proposed public benefit test.

The report adds: "There is little or no reference in their annual report to promoting their work to a wider section of the public."

DSC also examined Nuffield Hospitals Group, which last year had a £410m turnover. It notes that the group is attempting to cut charges to "affordable levels" - around £290 to £349 a day, broadly in line with private sector competitors BMI Healthcare and Bupa.

But, the report said, considering the tax breaks secured by Nuffield "it is surprising to see that these advantages are not reflected more in prices or in additional charitable services offered".

Report author Emma Jepson, a DSC researcher, said the hospitals were "not really making provision for charitable care or public benefit". They were meeting the charitable purpose of "relief of the sick" under Britain's 400-year-old charity law, she said. "But when the new law comes in, they are not meeting provision of public benefit."

The Nuffield Hospitals chief executive, David Mobbs, said the organisation was not for profit, had no shareholders and reinvested its surpluses in its hospitals and providing patient care.

"Nuffield Hospitals delivers its charitable services through the provision of acute healthcare services, not only for those who have the ability to pay themselves but also through private medical insurers and by assisting the NHS in reducing waiting lists," he said.

No one from the London Clinic was available for comment.