Consultation on business donations of goods to charities

In April 2025, HMRC launched a consultation of the VAT treatment of business donations of goods to charities – welcome news for charities who have long been hoping for the introduction of further easements in the sector. The proposal is to introduce a VAT relief for goods donated by businesses to charities to give away for free to those who need it, or to use such goods in the delivery of their services. 

Currently the VAT rules only offer VAT relief for goods donated to charities for sale (such as through a charity shop). However, this does not extend to the onward donation of those goods or use by the charity in delivering services. 

Aimed at reducing the risk of abuse the consultation proposes certain conditions for the relief to apply. These being:

1. A cap on the value of donated goods such as £50 or £100 for each individual item.
2. ‘High-risk’ items such as laptops, tablets, and mobile phones may be excluded from the relief, or a list of eligible goods could be created.
3. The relief could be restricted to purpose of the donated goods, such as to be donated to those in need. The consultation recognises that this would be challenging to manage for many charities.
4. A monetary value limit of the total value of donated goods an individual receives.
5. Conditions for eligibility may also be targeted at the organisations receiving the goods. The relief may be limited to specific groups such as registered charities, or to those whose charitable objectives align with poverty relief.