A consultation has been launched to gather feedback on a proposed extension of the VAT relief for business donations of goods to charities.
Currently, the VAT rules allow relief on:
- VAT on goods donated to charity for sale (for example, through a charity shop).
But there is no relief for:
- Onward donation of the goods to people in need, or for the delivery of the charity’s own services.
The rules were originally structured in such a way to prevent VAT fraud; however, the disparity in relief has held back the volume of donations made to people in need. The purpose of the consultation is to align the VAT rules around the treatment of donations without compromising the integrity of the VAT system.
HM Treasury welcomes contributions from any individual or organisation interested in this topic, including charities, social enterprises, retailers and manufacturers – this will enable them to gather views on the different types of operating models which would be impacted, as well as on the scope of a relief, particularly eligible goods, and the design of its administration.
VAT Treatment of Business Donations of Goods to Charity – Consultation can be downloaded here.
Responses to the consultation can be submitted via the online SmartSurvey form or can be submitted via email to CharitableDonationsConsultation@hmtreasury.gov.uk no later than 23:59 on 21 July 2025.
