- New VAT Relief: From 1 April 2026, businesses donating eligible goods to registered charities will no longer need to account for VAT on those items, provided they are for onward distribution to people in need or for use in the charity’s services. Value limits and exclusions (e.g., excise goods) will apply.
- Policy Objective: Encourages charitable giving by reducing VAT costs for businesses, supporting charities’ work, and promoting sustainability through reuse of surplus goods, aligning with the government’s circular economy goals.
- Implementation & Impact: Legislation will amend Schedule 4 of the VAT Act 1994 via Finance Bill 2025-26; expected Exchequer cost is £10m annually from 2026–27 onwards, with negligible administrative burden for businesses and HMRC, and indirect benefits for individuals relying on charities.
Source gov.uk
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