New VAT relief for business donations of goods

The introduction of VAT relief on business donations represents a significant shift in the financial landscape for UK charities. Historically, businesses donating goods—particularly new items—were required to account for output VAT, creating a financial barrier that limited the volume of charitable donations. From April 2026, the removal of this VAT liability allows businesses to donate items freely, without incurring additional costs. This reform could dramatically increase the flow of valuable goods such as technology equipment, furniture, home goods, and essential supplies into the charity sector. For charities, the implications extend far beyond simple cost savings. Organisations providing frontline support, emergency relief, digital inclusion initiatives, or community services will now have opportunities to expand programmes while reducing direct procurement costs.

However, this expansion also introduces new operational considerations. Charities will need to ensure robust systems for inventory tracking, secure storage, and ethical allocation of donated goods. Transparency will be essential to maintain public trust, requiring well‑structured audit trails and governance processes. Despite these challenges, the VAT change marks an important step toward strengthening supply‑chain‑based philanthropy and fostering deeper collaboration between the business community and the third sector, helping charities extend their reach and impact.

Find out more about VAT relief for business donations on goods to charities

If you have any questions, then please feel free to get in touch with Alan Rolfe on 023 8046 1235 or email Alan Rolfe.