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VAT boost to charitable donations

VAT boost to charitable donations

2 May 2024

The government is looking to introduce a new relief that would provide a VAT boost to charitable donations. The new VAT relief would be designed to encourage businesses to donate everyday items to charities without creating a VAT liability.

The government plans to introduce a new relief to boost VAT on charitable donations. This new VAT relief aims to motivate businesses to donate everyday items to charities without incurring a VAT liability. They will launch a 12-week consultation on these proposed changes before 23 July 2024.

Currently, firms don’t pay VAT on donated goods that are sold on, like clothes, hygiene supplies, and cleaning products. But, if these charitable donations are distributed free of charge to those in need, they must account for VAT.

The proposed relief aims to promote donations of low-value household goods such as:

  • Hygiene items (soap, toothpaste, toothbrushes, shower gel, toilet rolls)
  • Second-hand items from hotels (like sheets, kettles)
  • Cleaning supplies (including laundry detergent)

However, the new VAT relief won’t apply to goods donated for the charity’s use, like new IT equipment, to prevent potential VAT avoidance.

They will announce the consultation results and any changes at a future fiscal event.

Source: HM Treasury Tue, 30 Apr 2024 00:00:00 +0100

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