From 1 April 2026, changes to the Value Added Tax Act 1996 mean that VAT-registered businesses will no longer be required to account for VAT when donating certain goods to charities.
Previously, businesses were required to account for VAT when donating business goods to charity where input VAT had originally been recovered on their purchase.
With the new VAT relief, VAT registered businesses may donate eligible goods to a charity without incurring a VAT charge, provided the goods donated to a charity are intended for:
- Onward donation to an individual, another charity, or another organisation
- Use in the charity’s non-business activities.
To qualify for the new VAT relief, the following conditions must be met:
- The goods must be eligible (generally an item under £100 in value)
- The goods must be donated for an eligible use (for non-business activities or donated onward either directly to or through another organisation)
- The donation must be made to a charity that is registered with the Attorney General’s Chambers in accordance with the Charities Registration and Regulation Act 2019
- The charity must provide evidence to the business confirming that eligible goods have been received
Further information on eligible and excluded goods, as well as the evidence required when donating goods to charities, can be found in section 5.5.5 to 5.5.11 of the guidance 'How VAT affects Charities (VAT Notice 701/1)' available on GOV.uk.
