Compliance
New VAT Relief for Business Donations: What Companies & Charities Need to Know
Starting 1 April 2026, VAT on many business donations to charities will be relieved—this guide breaks down who qualifies, what goods are affected, and how to prepare.
By NomadicTax Research Team • 5-8 min read • April 7, 2026
## What is the New VAT Relief?
- **Effective date**: 1 April 2026. ([gov.uk](https://www.gov.uk/government/publications/removing-vat-on-donations-of-eligible-goods-from-businesses-to-charities/vat-relief-for-business-donations-on-goods-to-charities?utm_source=openai))
- **What it does**: Removes the obligation for VAT-registered businesses to account for VAT on eligible goods donated to registered charities, provided those goods are for **onward distribution** or **use in delivering charitable services**. ([gov.uk](https://www.gov.uk/government/publications/removing-vat-on-donations-of-eligible-goods-from-businesses-to-charities/vat-relief-for-business-donations-on-goods-to-charities?utm_source=openai))
- **Value limits**: £100 per item for most goods. Higher limit (£200) for a *specified list* like white goods, furniture, computers, phones, tablets. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/69271396a245b0985f0340dd/OS_Budget_2025_Policy_Costings.pdf?utm_source=openai))
## Who Benefits & Who Must Prepare
**Businesses** that make donations:
- Those with surplus stock, disposables or goods usually destined for disposal.
- Must confirm the charity is registered and ensure proper records to show donations meet criteria (goods value, onward use, context).
**Charities**:
- Those directly receiving goods for distribution to people in need, or using them in service delivery.
- Helps reduce overheads and reduce administrative burdens.
**Excluded goods**:
- Items under excise duty are excluded.
- Goods over certain value limits unless listed.
- Some goods that do not properly qualify under “onward distribution” or “service use” criteria.
## Practical Examples
1. **Retail business**: A furniture store donates surplus sofas worth £150 each to a homeless shelter—but only furniture is listed among higher limit goods. Since sofas are on the higher-limit list, **VAT relief applies** for each sofa.
2. **Electronics retailer**: Donates used phones or tablets for use in charitable digital inclusion programs. Items are on the specified list; relief applies.
3. **Small business**: Donates basic clothes (value £80 each). Since under standard £100 limit and basic clothes are typical items, the relief applies.
## Actionable Steps Before April 2026
- **Review your donation practices**: Identify potential goods you donate which would qualify.
- **Check charity status & value thresholds**: Ensure recipient charities are registered and check per-item values.
- **Update internal procedures & documentation**: Record item descriptions, values, recipient usage, and ensure goods are for distribution or service.
- **Train finance teams**: To understand the relief, ensure correct VAT treatment, avoid accounting for VAT incorrectly.
## Impacts and Considerations
- **Cash flow**: Businesses will no longer have to pay output VAT on eligible donated goods—minor savings per donation but cumulative benefits likely across many donations.
- **Environmental and Social**: Incentivises donating surplus stock rather than disposing of it. Charity-driven social programs benefit.
- **Administrative simplicity**: Relief simplifies VAT accounting for qualifying donations.
- **Scope & limits**: Key to stay below individual item value thresholds unless goods are listed, and maintain records in case of HMRC checks.
**Category**: Compliance
**Tax Home**: UK
**Author**: NomadicTax Research Team
**ReadTime**: 5-8 min
**Published**: true