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Some fundraising activities are taxable business activities, so they're liable for VAT. However, charities and some other not-for-profit organisations get special VAT treatment for certain fundraising events. So, you may be exempt from charging VAT on supplies made at such events, if they meet certain conditions.
This guide explains what organisations qualify for this special VAT treatment, and what conditions fundraising events have to meet to be exempt from VAT.
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When your organisation holds an event to raise funds you will normally make taxable business supplies and your income may be liable to VAT - for example, admission charges, sales of goods, catering, and so on. However, there is a VAT exemption for specific types of fundraising events held by certain types of organisation. For more information on what counts as a taxable business supply, see our guide ‘How VAT applies to charities and not-for-profit organisations’ in the ‘More useful links’ section.
In order for your fundraising event to qualify for exemption from VAT, you have to be one of the following types of organisation. If you don't qualify for the exemption and you hold a fundraising event and the turnover takes you over the annual VAT registration threshold you may need to register for VAT if you haven't already.
Find out more about whether you need to register for VAT
To apply the VAT reliefs and exemptions available for charities your organisation must hold evidence that it is registered with the Charity Commission for England and Wales. If it is not registered with them - for example, if it is exempt from registration with the Charity Commission or is a Scottish or Northern Ireland charity - then it must have evidence that it has been formally recognised as a charity by HM Revenue & Customs (HMRC) for tax purposes.
A branch of a charity may or may not be a separate charity to which the exemption applies - this will depend on how the branch and its parent are set up.
Find out about how to apply for recognition as a charity for tax purposes
A body corporate which is wholly owned by a charity and whose profits - from whatever source - are payable to a charity. For example, a charity's own trading company can hold fundraising events on behalf of the charity.
In addition to charities, the following bodies may also qualify for the fundraising exemption:
Not all fundraising events qualify for exemption from charging VAT.
A fundraising event is an event clearly organised and promoted primarily to raise money for the benefit of your charity or qualifying body. People attending or participating in the event must be aware of its primary fundraising purpose. Therefore events primarily organised for another purpose, such as an annual general meeting, do not qualify.
If an event qualifies for the VAT exemption, then the exemption is mandatory. You can't charge VAT on supplies that are normally taxable at the standard rate, and you therefore won't be able to recover any VAT you pay out on purchases you make in connection with them.
However, goods that are normally zero-rated, such as brochures, books, children's clothing etc, can still be zero-rated even when sold at a qualifying event. This means that if you're VAT registered you can recover the VAT you pay out on purchases relating to those zero-rated sales.
The event must be organised and promoted primarily to raise money for the benefit of your charity or qualifying body. Social events, such as events that form part of a social calendar for members, but which incidentally make a profit, do not qualify for the exemption.
An 'event' is a one off - not an ongoing activity. Activities of a semi-regular or continuous nature, such as the frequent operation of a shop or bar, are not ‘events’. The relief is not intended to exempt normal trading activities from VAT.
For VAT exemption to apply, you can't hold more than 15 events of the same kind in your financial year at any one location. If you do, then none of the events qualifies for the VAT exemption, not even the first 15.
If you’re organising a joint event, then as long as all the participants are either charities or qualifying bodies, and none of the participants has exceeded their limit of 15 events at that location in their financial year, then the event can be exempt.
Where an event, such as a concert, is repeated on successive evenings, then each performance counts as a separate event. A single event that takes place at the same location for more than one day, such as a golf tournament, is accepted as one event.
Fundraising events, such as coffee mornings - where the gross takings from all similar events are no more than £1,000 per week - don’t count towards the 15 event limit. However, if that figure of £1,000 is exceeded in any week, then every event held that week counts towards the 15 event allowance. (Note that the £1,000 limit applies to the gross income of the event before you deduct any costs, such as the hire of a room.)
If you carry out activities like these more than once or twice a week then they’re likely to be trading activities (rather than ‘events’) and therefore would not be eligible for the exemption in any case.
'Location' means held in the same place. Similar kinds of events held in different locations would qualify for exemption provided all other conditions were met. For example, 20 balls held by a national charity each in different towns in the same financial year would all qualify for relief.
Clearly, events that need to be held on special premises, such as a sports ground, swimming pool or theatre, are easy to define. Each of these will be accepted as a different location.
If the event is held in a complex of cinemas, theatres or concert halls, the location is the specific cinema, theatre or concert hall in which the fundraising event takes place. However, if you have an arrangement such as weekly car boot sales each held in different, but adjacent fields, HMRC would have to consider whether that could potentially distort competition before we decide whether to allow them as different locations.
The following are examples of different kinds of events that may be held for fundraising purposes:
This is not an exhaustive list.
Even if your event qualifies for the fundraising event exemption, not all income relating to the event is necessarily exempt.
If your event meets the conditions for exemption, then the following income from the event will be exempt from VAT:
These examples are not exhaustive.
Where items are normally supplied zero-rated - that is they're taxable for VAT, but the VAT rate is 0 per cent, for example programmes and children's T-shirts, these can be zero-rated rather than exempted - see below.
You can zero-rate the sale of goods and services that would normally be zero-rated even though you sell them at an ‘exempted’ fundraising event. This means that if you are registered for VAT, you can recover any VAT you paid out on purchases directly relating to the supply of those goods because they’re taxable (although zero-rated). You can't recover VAT you pay out on purchases that relate to your exempt supplies.
Examples of zero-rated items are:
Find out more about the different rates of VAT that apply to different types of goods and services
Commemorative goods and souvenirs sold for a period after the qualifying fundraising event will not be exempt from VAT. For example:
If you use a professional fundraiser or agent and they charge or retain any part of the gross receipts, this is consideration for agency services and the charge will be subject to VAT. This applies even if the amount is less than or equal to the cost of arranging the event.
If a fundraising event doesn't qualify for exemption, you have the option of setting a basic minimum charge - on which you have to account for VAT - and then inviting people attending the event to contribute a voluntary donation on top.
The extra contributions will be outside the scope of VAT only if all the following conditions are met:
If the publicity material for a fundraising event suggests that those paying a recommended extra amount are more likely to be admitted than those paying merely the basic ticket price, then the extra amount becomes part of the consideration for a supply of services, rather than a donation, and as such is subject to VAT at the standard rate.
There is no single document that you must hold to demonstrate that the event was organised primarily to raise funds. Minutes of meetings, costing and similar documents should show that the main purpose for holding the event is to raise funds for charitable purposes or a qualifying body's own benefit.
The event must be promoted in such a way that those attending the event are aware that its main purpose is to raise funds. Publicity material, tickets etc, should therefore clearly refer to fundraising. For example:
Examples of publicity material, tickets etc, should be retained to support evidence of exemption.
Income from sponsored events - such as sponsored walks, swims etc - may meet the fundraising exemption if you are a qualifying body and the event meets the conditions explained above.
However, some fundraising events - sometimes known as charity challenge events - do not qualify for the fundraising exemption if they include any of the following:
The fundraising exemption only applies to events organised by you, as a qualifying body. Many events that individuals take part in to raise funds for charity will not meet the conditions for exemption - for example, a commercially organised sports event such as a marathon or triathlon.
Often, a charity will pay for places within a commercially organised event, and then offer those places to individuals. However, if you allow individuals to take part in the event regardless of the amount they raise, you don't charge a registration fee and the individuals do not receive any benefits in return, the monies they raise can be treated as a donation and outside the scope of VAT.
If an event does not meet the conditions for the fundraising exemption and you do make supplies (providing goods or services for a charge) your supplies will be subject to their normal VAT liability.
If you provide benefits to the participants, such as bikes or watches, the amount raised by the participant will count as a benefit and will be taxable at the standard rate, unless the event qualifies for the fundraising exemption.
HMRC doesn't, however, consider the following to be benefits:
Some charities require individuals to pay a registration fee or insist that they raise a minimum amount of sponsorship before they can take part in the event. This is effectively an entry fee and is taxable at the standard rate, unless the event qualifies for the fundraising exemption. Any payment in excess of the minimum amount can be treated as a donation and outside the scope of VAT.
If you ask individuals to 'pledge' or 'commit' to raise a certain amount of sponsorship, but don't insist on any payment before allowing them to take part in the event, the total amounts raised count as donations and are outside the scope of VAT. You can encourage individuals to pass on sponsorship money as they receive it, but can't insist on receiving a certain amount before allowing them to take part.
Some charities offer prizes to top fundraisers. These are not benefits for VAT purposes and do not affect the VAT treatment of income from participants.
For detailed guidance on the VAT liability of supplies made at sponsored events in the UK and charity challenge events see paragraph 5.9.3 and Section 10 of VAT Notice 701/1 Charities.
Go to VAT Notice 701/1 Charities
Read more about the Tour Operator's Margin Scheme in VAT Notice 709/5
For more help you can contact HMRC Charities by phone, email or post.
Contact details for HMRC Charities
How VAT applies to charities and not-for-profit organisations
