VAT for charities and other not-for-profit organisations

In this section:

How VAT applies to charities and not-for-profit organisations
Zero-rated VAT on charity-funded goods or services
How VAT applies to charity fundraising
Reduced VAT on gas and electricity used for charity purposes
How charities can import goods VAT free

You are here:
Home >
VAT >
VAT for charities and other not-for-profit organisations >
How VAT applies to charity fundraising

How VAT applies to charity fundraising

Some fund-raising activities are taxable business activities, so they're liable to VAT. However, charities and certain other not-for-profit organisations get special VAT treatment for certain fundraising events. So, you may be exempt from charging VAT on your fundraising 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.

On this page:

Organisations that benefit from the VAT exemption for fundraising
Events that qualify for the VAT exemption
Income that qualifies for the VAT exemption
Income from non-qualifying events
Evidence to show that the event qualifies for exemption
Participation in a sponsored event

Organisations that benefit from the VAT exemption for fundraising

If you carry out a business activity, any supplies that you make as a result of that activity may be taxable. So ordinarily, the type of event typically held to raise funds would be considered to be a business activity, and any admission prices, ticket sales and so on would be liable for VAT. However, there is a VAT exemption for certain types of fund-raising events held by certain types of organisation.

In order for your fundraising events to qualify for exemption from charging VAT, you have to be one of the following types of organisation. If you don't qualify for exemption and you hold a fund-raising event, if it takes you over the annual registration threshold - currently £67,000 - you may need to register for VAT if you aren't already.

Read our guide on whether you need to register for VAT

A charity or a formally appointed agent of a charity

For VAT purposes, you are a charity if you are registered with the Charity Commission, or if you are already accepted by us as being a charity for taxation 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.

A body connected with a charity

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.

Qualifying bodies

In addition to charities, the following bodies also qualify for the fundraising exemption:

trade unions and other staff associations
professional associations
associations for the advancement of knowledge, etc
associations for making representations to Government on business and professional interests of members
bodies that have objects which are in the public domain and are of a political, religious, patriotic, philosophical, philanthropic or civic nature
non-profit-making bodies established for the principal purpose of providing facilities for people to take part in sport or physical education
certain non-profit-making cultural bodies managed and administered on an essentially voluntary basis by persons who have no financial interest in its activities

Top

Events that qualify for the VAT exemption

Not all fundraising events qualify for exemption from charging VAT.

Fundamentally, a fundraising event is an event clearly organised and promoted primarily to raise money for the benefit of the 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.

Note that if an event qualifies for the VAT exemption, then the exemption is mandatory. You can't charge VAT on an event that qualifies, and you therefore won't be able to recover any VAT you pay out on purchases you make in connection with the event - unless those purchases relate to taxable sales you make within the event. You may be able to zero rate some goods that you sell at the event, instead of exempting them, which means you can recover VAT you paid out on purchases relating to those taxable sales.

Primarily to make money

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.

Non-recurring nature

An 'event' is an incident, not an ongoing activity. This means that activities of a semi-regular or continuous nature, such as the frequent operation of a shop or bar, cannot be an event. The relief is not intended to exempt normal trading activities from VAT.

Limit on the number of events

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 are 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.

The 15 event limit does not apply to fund raising events where the gross takings from all similar events, such as coffee mornings, are no more than £1,000 per week. Such activities carried out more than once or twice a week are in any case likely to be trading activities, and therefore not eligible for this exemption at all. 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 - you can't deduct any costs, such as the hire of a room.

At any one location

'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 boot sales each held in different, but adjacent fields, we'll have to consider whether that could potentially distort competition before we decide whether to allow them as different locations.

Typical events

The following are examples of different kinds of events that may be held for fundraising purposes:

a ball, dinner dance, disco or barn dance
a performance - such as concert, stage production, and any other event which has a paying audience
the showing of a film
a fête, fair or festival
a horticultural show
an exhibition - such as art, history or science
a bazaar, jumble sale, car boot sale, or a good-as-new sale
sporting participation - including spectators - such as a sponsored walk or swim
a sporting performance
a game of skill, a contest, or a quiz
participation in an endurance event
a fireworks display
a dinner, lunch or barbecue
an auction of bought-in goods - an auction of donated goods is zero-rated anyway
an event in conjunction with another event, such as an auction marquee at a sporting event

This is not an exhaustive list.

More about what qualifies as a fundraising event in VAT Notice CWL4

Top

Income that qualifies for the VAT exemption

Even if your event qualifies for the fundraising event exemption, not all income relating to the event is necessarily exempt.

Event income that qualifies for the VAT exemption

If your event meets the conditions for exemption, then the following income from the event will be exempt from VAT:

all admission charges
the sale of commemorative brochures - but these may be zero-rated, see below
the sale of advertising space in those brochures - but this may be zero-rated, see below
other items sold by the charity such as T-shirts, non-donated auctioned goods, etc
sponsorship payments directly connected with a qualifying event

These examples are not exhaustive.

Where items are normally supplied zero-rated such as children's T-shirts and printed matter, then these can be zero-rated rather than exempted - see below.

Goods you sell at an event that can be zero-rated

Some goods at an exempted event can be zero-rated for VAT purposes, rather than exempted. This means that if you are registered for VAT, you can recover any VAT you paid out on purchases directly relating to the taxable supply of those goods. You can't recover VAT you pay out on purchases that relate to your exempt supplies.

The sale of printed matter, such as programmes and commemorative brochures or any other goods that are eligible for the zero rate relief from VAT, may still be zero-rated when supplied at a fund-raising event.

Examples of zero-rated items are:

the sale of donated goods by a charity
eligible food .
eligible printed matter
young children's clothing
the supply of advertising time or space to a charity
any other goods that qualify for zero-rating

Find out more about VAT rates

Income that does not qualify for the exemption

Commemorative goods and souvenirs sold for a period after the qualifying fundraising event will not be exempt from VAT. For example:

video and audio recordings of the fundraising event sold after the event has taken place will be standard-rated
surplus commemorative items such as adult T-shirts, mugs, etc will be standard-rated
commemorative programmes will remain zero-rated
children's T-shirts will remain zero-rated
donated goods for sale may still be sold VAT free provided the normal conditions are met

Income paid to a professional fund-raiser or agent

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 will be subject to VAT. This applies even if the amount is less than or equal to the cost of arranging the event.

Top

Income from non-qualifying events

If a fund-raising event doesn't qualify for exemption, you have the option of setting a basic minimum charge - on which you do 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 if all the following conditions are met:

it is clearly stated on all publicity material, including tickets, that anyone paying only the minimum charge will be admitted without further payment
the extra payment does not give any particular benefit - for example, admission to a better position in the stadium or auditorium
even if you indicate the level of donation that you'd like to receive, it's up to the ticket holders how much contribution they make - if any
for film or theatre performances, concerts, sporting fixtures, etc, the minimum charge is not less than the usual price of the particular seats at a normal commercial event of the same type
for dances and similar functions, the total you raise from the minimum charges - that is, the portion on which you have to account for VAT - is enough to cover your total costs in organising the event

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.

Top

Evidence to show that the event qualifies for exemption

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:

'fundraising for'
'in aid of'
'help us to build'
'help us to raise money for'

Examples of publicity material, tickets, etc should be retained to support evidence of exemption.

Top

Participation in sponsored events

Events organised by you

Income from sponsored events held in the UK and organised by you, assuming that you are a qualifying body and the event meets the conditions laid out here, will be exempt from VAT.

Benefits

Free travel or accommodation and other benefits, such as bikes or watches are benefits. If you provide such benefits, the amount raised by the participant will be taxable at the standard rate.

We don't consider the following to be benefits:

free training and health advice
a free T-shirt, running vest or similar that clearly portrays the charity the individual is taking part on behalf of
free massages and support for physical well-being during the event
free pre-event meeting, which may include free professional advice or support, a simple meal, energy drinks and encouragement from the charity and other participants
free post-event meeting, which may include medical treatment or advice, changing facilities, light refreshments and gives the charity the opportunity to thank participants

Registration fees

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. Any payment in excess of the minimum amount can be treated as a donation and outside the scope of VAT. When this happens you will be entitled to reclaim some of the VAT you incur on your expenses.

Minimum commitments

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.

Prizes

Some charities offer prizes to top fundraisers. These are not benefits for VAT purposes and does not affect the VAT treatment of income from participants.

Participation in a commercial event

You should be aware that the fundraising event VAT exemption only applies to events as a whole, 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.

Often, a charity will pay for places within a commercially organised event, and then offer those places to individuals. Where 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.

Top