Liability ― donated goods

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note examines the liability of sales of donated goods by charities and their trading subsidiaries.

For an overview of VAT liability more broadly, see the VAT liability ― overview guidance note.

For in-depth commentary on the legislation and related case law, see De Voil Indirect Tax Service V4.266A.

Liability of donated goods ― the basics

Charities and their trading subsidiaries are (subject to conditions) able to zero-rated the sale of goods that have been donated to them.

Typically this relief will apply to donated goods that are sold in charity shops, but it is not limited to such goods. For example, depending on the circumstances, the zero-rate could also cover goods sold at auction or via a stall at an event.

The zero-rate is confined to donated goods so it does not cover goods that are purchased by a charity for resale in a charity shop.

Where this zero-rated does not apply the sale of goods will generally be standard-rated, albeit other VAT reliefs (such as those for food, children’s clothing

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