POLICY WIN: Charities invited to share views on the VAT treatment of business donations of goods to charity.
The government has announced the launch of a long-awaited consultation on the treatment of business donations of good to charity.
The news comes 12 months after the previous government promised to consult on VAT relief on low value donations of goods.
CFG has been calling for the consultation for some time and welcomes yesterday's (28 April) announcement.
The government states that it wants to 'make sure that the right tax frameworks are in place to facilitate' charitable giving as well as reduce waste.
Under the current rules, businesses benefit from a zero rate on goods donated to charity for sale, expert or letting and therefore can claim VAT relief.
This relief most commonly applies to goods that have been donated which the charity then sells on (eg via a charity shop), regardless of whether the donations are new or second-hand.
However, if a business donates goods for any other purpose, including for the charity to give them away free of charge, or use in the delivery of their services, it must pay VAT to HMRC on those goods if it recovered any VAT on their purchase.
The government is now looking at how it can introduce this VAT relief and proposes that the relief should apply to donations made by VAT-registered businesses to charities.
Richard Sagar, Head of Policy, CFG, comments:
“CFG would like to see the introduction of VAT relief on business donations and goods for charities that minimises both the administrative burden and opportunities for abuse.
“We urge all relevant charities and businesses to respond to the consultation which will provide much-needed information for the shaping of any new VAT relief framework.”
The consultation sets out a total of 26 questions for businesses and charities to respond to and views are now invited. The consultation will close at
Read and respond to the consultation