Many of our community-minded clients often have surplus stock—such as toiletries, cleaning products, or small electronics—that they would like to donate to local causes. Historically, donating these items could actually trigger an "output VAT" charge for the business, effectively penalising the company for being charitable.
From 1 April 2026, a welcome new relief removes this barrier. Businesses can now donate eligible surplus goods to registered charities without having to account for VAT on the gift.
Reducing Waste and Supporting the Community
This new rule is specifically designed to encourage a circular economy and reduce waste. The relief applies to goods that the charity will either give away for free to people in need or use directly in their charitable activities (such as using donated cleaning supplies in a homeless shelter).
There are value limits to be aware of: the relief generally covers items worth up to £100 each, though this rises to £200 for essential "digital poverty" items like laptops and mobile phones.
Keeping the Correct Records
To take advantage of this relief, you must maintain an audit trail. HMRC requires evidence that the recipient is a registered charity and a certificate from them confirming how the goods will be used. Without this, the donation could still be treated as a taxable supply.
How CoreAcc Accountants Can Help
We love seeing our clients support great causes, and we’re here to make sure you do it tax-efficiently. We can help you by:
● Verifying which of your surplus items qualify for the new VAT relief.
● Drafting the "Donation Certificates" you need your chosen charities to sign.
● Ensuring your VAT return correctly reflects these donations to avoid HMRC enquiries.
