VAT Reliefs for Charities - Comprehensive Guide

Certain goods and services are zero-rated or reduced-rated when bought by charities. A charity does not have to be VAT registered to take advantage of these reliefs.

Each relief has specific conditions which must be met and charities wishing to take advantage of these reliefs must usually provide their suppliers with eligibility declarations certifying that the conditions have been met for that relief. 

Table of contents

Advertising

The relief from VAT on advertising covers all types of advertisements, including staff recruitment. The name or logo of the charity does not need to be included for relief to be allowed. 

Charities can advertise VAT free in any media which communicates with the public. Examples include

• television
• cinema
• billboards
• the sides of vehicles
• newspapers
• printed publications

Relief also extends to advertising on items such as

• beer mats
• calendars
• the reverse of till rolls
• clothing

The sale of the items themselves will not be VAT free, unless they qualify for other reliefs for example, books or children’s clothing.

Any method that is not the supply of someone else’s advertising time or space or is in the form of general marketing and promotion is not covered by the relief. Examples of exclusions include

• direct mail and telesales
• anything on a charity’s own internet website
• advertisement on a charity’s own greeting cards
• exhibition stands and space
• commemorative items even if they bear the charity’s logo, for example, pens and adult clothing

Where an advertisement meets the conditions for relief from VAT, the supply of design or production of the advertisement will also qualify for relief. This includes the design of a poster or the filming or recording of an advertisement to be broadcast.

Goods linked to the design or production of an advertisement can also be zero rated. For example:

• a finished article, for example, a film or recorded cassette
• an element to be incorporated in the advertisement such as a photograph, picture or soundtrack
• earlier versions of an advertisement produced, to see which works best, even if it’s the intention that only one version will be used.

There is no relief for charities producing their own advertisements as this is not a supply to the charity. Therefore, charities cannot purchase the equipment and raw materials used to create advertisements VAT free.

Goods connected with the collection of donations

Although there is no provision in VAT legislation for relief from VAT on goods connected with the collection of donations, there are a number of formal, published concessions.

Goods which can be zero rated under extra statutory concessions are:

• certain printed stationery used for appeals
• collection boxes and receptacles
• lapel stickers and similar tokens 

Printed stationery

When supplied to a charity, the following items can be zero-rated under the concession:

collecting envelopes asking for donations of money, and envelopes used by religious and other organisations in their planned giving schemes

pre-printed appeal letters with a primary aim of seeking money for the charity

envelopes used to send out appeal letters and envelopes for sending donations to the charity. Both types of envelopes must be over-printed with an appeal request related to the appeal in the letter or must be distinguishable from the charity’s usual stationery.

This relief from VAT does not cover general stationery supplied to charities.

Collection boxes and receptacles

All types of boxes and receptacles used for collecting money qualify for relief from VAT if they meet all 3 of the following conditions:

1. They must be secure, that is, capable of being sealed, for example, by tamper evident sticker, tape, or lock.
2. They must clearly be charity collecting boxes for a named charity.
3. They must either show the name of the charity, for example, by indelible printing, embossing or having raised letters, or allow for the charity name to be added later.

Examples of boxes which qualify relief include:

• pre-printed card collecting boxes
• moulded plastic collecting boxes
• models in any material including hollow plaster, wood, base metal or glass

These boxes can be handheld, floor standing, wall mounted or for placing on a table top or shop counter.

Boxes of greater value, such as those made of precious metal, cannot be zero-rated.

General purpose buckets of the kind available from hardware stores are not covered by the concession but the following will qualify for relief:

• specially designed tamper proof bucket lids with tamper evident stickers making them suitable for a charity donation
• bucket shaped receptacles, which cannot be used for anything except collecting donations of money
• packs for assembly consisting of a bucket, a money collecting top and tamper evident seals and labels

Receptacles which have another purpose but also having a coin slot do not qualify for VAT relief. Examples include:

• wishing wells
• fonts
• furniture
• fixtures and fittings

However, a simple collecting box fixed to any of these items would still qualify.

Lapel stickers and similar tokens

To qualify for relief from VAT, lapel stickers, emblems and badges must be given free as an acknowledgement to donors of money, have no intrinsic value and be of low cost to the charity.

The relief is restricted to small items designed to be worn on clothing, of a kind that were traditionally attached to the lapel. Included are:

• paper stickers
• ribbons
• artificial flowers (if these are used as a symbol of the charity eg Marie Curie daffodil)
• metal pins and badges

Large items for decorating vehicles, buildings, or monuments are not included in the relief even if these are just bigger versions of a lapel badge.

Aids for the disabled

Supplies to charities of certain goods and services which the charities make available to disabled people for their personal or domestic use are zero-rated. The relief from VAT applies to charities which serve the needs of disabled people.

The goods which qualify for relief from VAT are:

• Adapted motor vehicles for disabled wheelchair users
• Medical and surgical appliances

These are devices or pieces of equipment designed solely for the relief of a severe impairment or severe injury. Examples include:

• • • artificial limbs
    • artificial respirators
    • heart pacemakers
    • invalid wheelchairs
    • leg braces
    • neck collars
    • oxygen concentrators
    • renal haemodialysis units
    • specialist clothing
    • specialist footwear
    • wigs

However, the goods can only be zero rated if they’re sold without the need for the disabled person to attend a hospital, nursing home or similar institution for their fitting.

• Electrically or mechanically adjustable beds, chair or stair lifts, hoists and lifters, sanitary devices.

A bed is only eligible for relief if it is clearly stands out as specialised for the use of people with disabilities i.e., being similar to a hospital bed. As well as being electrically or mechanically adjustable, it should have specific design features that distinguish it from a standard bed, for example:

• • • fitted with cot sides
    • height adjustable

A mattress is only eligible for this relief if it’s either:

• • • supplied as part of a single supply of a qualifying bed
    • designed solely for use by a disabled person.

• Boats

To qualify for relief from VAT a boat must be either designed or prior to supply or import be substantially and permanently adapted, for use by disabled persons or to carry disabled persons. Such a boat must include all or most of the following features:

• • • a ramp for wheelchairs
    • lifts and level non cambered surfaces to accommodate wheelchair movements
    • specialised washing and lavatory facilities accessible to disabled people
    • specially equipped galley and sleeping areas and steering facilities designed for use by disabled people
    • handrails
    • wheelchair clamps
    • steering or other controls adapted for use by disabled people

• Other equipment and appliances ‘designed solely’ for use by a disabled person.

Equipment which has been designed solely for use by disabled people will stay eligible for relief even if it’s available to be bought by people who do not have a disability, although it can only be zero rated when actually supplied to eligible customers. Examples of goods which can be zero rated are:

• • • braille embossers
    • incontinence products
    • long handled pick up sticks
    • text telephones
    • whistling cups for blind people
    • white canes for blind people
    • vibrating pillows for deaf or hard of hearing people
    • transcutaneous electrical nerve stimulators
    • wheelchairs

• Computer devices and other electronic devices.

Computer devices and systems can only be bought VAT free when they’re sold as part of an assistive technology system. This involves the pre-installation of specialist software which is specifically required by the disabled individual. Where such a purchase is made, the complete system will be defined as designed solely for use by that disabled person and will be eligible for the relief.

• Auditory training aids for deaf children and equipment to aid the hard of hearing.
• Low vision aids

Corrective spectacles and contact lenses are not relieved from VAT. However, the supply to an eligible customer of other types of low vision aids can be zero rated.

• Parts and accessories

Parts and accessories designed solely for use in or with goods which themselves qualify for VAT relief can be zero rated.

• Mobility scooters
• Hydrotherapy pools

Other VAT reliefs

Relief from VAT is also available to charities on the following:

• certain construction services
• drugs and chemicals
• equipment for making ‘talking’ books and newspapers
• lifeboats and associated equipment, including fuel
• medicine or ingredients for medicine
• resuscitation training models
• medical, veterinary and scientific equipment
• ambulances
• rescue equipment

Fuel and power

There is no general relief from VAT on supplies of fuel and power to charities. However, charities can be charged the reduced rate (currently 5%) where fuel and power is supplied for a qualifying use. Qualifying use means either supplied for use in:

• a dwelling or certain other types of residential accommodation, such as a children’s home, hospice or care home for the elderly or disabled
• charitable non-business activities, such as free day care for the disabled

Additionally, deliveries of specified small quantities of fuel and power are automatically treated as being for a qualifying use. For example, electricity supplied at a rate not more than 1,000 kilowatt hours a month or a delivery of not more than 2,300 litres of gas oil, will qualify for the reduced rate whatever the use of the building.

Fuel and power supplied partly for a qualifying use can be apportioned by the supplier. Charities need to provide the supplier with a certificate declaring the percentage of the fuel and power which will be used for a qualifying purpose.

Charities which qualify for the reduced rate for fuel and power, will not have to pay Climate Change Levy