01
Income labels do not decide VAT
A donation where the donor receives nothing in return may be outside the scope, while sponsorship or membership can involve a taxable supply. Grant treatment depends on whether the payment is consideration for a service.
- Donations
- Grants
- Sponsorship
- Membership and admission
02
Costs may cross several activities
Charities often incur shared costs for non-business, taxable and exempt activity. Recovery may require a business and non-business apportionment followed by partial exemption for the business element.
- Direct attribution
- Non-business apportionment
- Partial exemption
- Relief certificates
Primary sources
Tax guidance changes. These official sources were checked on 31 August 2026.
VAT Notice 701/1: charitiesVAT Notice 706: partial exemption