A major change to VAT rules that came into force on 1 April 2026 marks a significant step forward for charities and the people they support.
After years of work by Charity Finance Group (CFG), alongside sector partners including Charity Tax Group, the government has introduced a new VAT relief on goods donated to charities.
For the first time, businesses donating goods for onward distribution or use in charitable services will no longer face a VAT charge. Previously, this tax barrier meant that many companies felt compelled to dispose of surplus items – including toiletries, furniture, clothing, digital devices and essential household equipment – rather than donate them to the communities that would benefit most.
Removing this barrier represents a substantial shift in how surplus goods can flow through supply chains and into the hands of people experiencing hardship, crisis or transition. The relief is expected to free up large volumes of everyday essentials that charities can use directly or redistribute to households in need.
Richard Sagar, Head of Policy, comments:
“This is a significant win for CFG and our sector partners. We have argued for several years that the VAT rule on donated goods must change. Now that it has, it will unlock millions of pounds’ worth of everyday and essential items, redirecting them away from landfill towards the people who really need them.
“Businesses will also benefit. By integrating charitable donations into their regular operations, businesses will no longer incur a tax penalty. They can now reduce waste, strengthen their sustainability commitments, and support the causes that matter to them.
“CFG is proud to have championed this change, which is a clear win‑win for all. It’s an important example of what we can achieve when our sector works in partnership with an engaged government to reform our tax system.”
For more information, email the Policy Team
Resources and related content
CFG blog: Goods for good by Isaac Bristol, Policy Manager, CFG (17/03/2026)
News story: CFG supports simplifying VAT rules on business donations to charities
CFG’s consultation response: CFG’s response to VAT on donated goods consultation (18/07/2025)
News story: CFG welcomes consultation on the VAT treatment of business donations of goods to charity (29/04/2025)
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