The government launched a consultation on a new VAT relief for donated goods as part of HMRC’s tax administration and simplification update on 28 April 2025. Currently, goods given to a charity by a business can be zero-rated in limited circumstances only. The government is interested in expanding the relief but only if the relief can be protected from abuse. The options set out by the government were explored in detail in an earlier article.  

ICAEW has responded to the consultation in ICAEW Representation 55/25. ICAEW is committed to a clear, stable and broad-based VAT system, as explained in the campaign How to fix VAT. As such, ICAEW does not generally support the creation or extension of VAT reliefs. However, ICAEW acknowledges the need to take action in this case. Therefore, ICAEW has responded to the consultation on the basis that the new relief will be introduced and with the aim of ensuring that it is implemented in the most practical, proportionate and administratively simple way possible.  

ICAEW supports limiting the relief to donations to bodies with charitable status as this provides a clear and regulated boundary, and favours a certification system to avoid placing the burden on donors to assess how goods will be used. ICAEW recommends against imposing value thresholds, or attempting to categorise eligible goods, as this would introduce complexity and reduce flexibility. Additionally, ICAEW cautions against restrictions based on recipient characteristics, or on whether goods are distributed or used in service delivery, as such distinctions are difficult to apply in practice and risk excluding legitimate charitable activity.