01
Charitable status is not a blanket VAT exemption
Charities can make taxable, exempt, zero-rated and outside-scope transactions. A freely given donation with nothing supplied in return may be outside the scope, while sponsorship, trading and admission income require separate analysis.
- Donations and grants
- Sponsorship and fundraising
- Trading subsidiaries
- Purchased-goods reliefs
02
Recovery may need two stages
Costs can relate to business or non-business activity, and business costs may then relate to taxable or exempt supplies. The attribution and apportionment method should reflect how resources are actually used.
- Business and non-business apportionment
- Partial exemption
- Shared overheads
- Capital projects
Primary sources
Tax guidance changes. These official sources were checked on 31 August 2026.
VAT Notice 701/1: charitiesVAT Notice 706: partial exemption