VAT Relief: Business Donations

Baroness Walmsley Excerpts

Tuesday 19th May 2026 Lords Chamber

Asked by

[Baroness Walmsley]

To ask His Majesty’s Government what assessment they have made of the impact of the VAT relief on business donations on goods to charities on food redistribution networks, including social supermarkets.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the new VAT relief on business donations of goods to charity came into effect on 1 April this year and it is too soon yet to assess the impacts. We anticipate the relief will incentivise increased food donations to charities eligible for the relief, meaning increased donations reaching those in need. The CBI estimates that the relief will lead to an additional £72.5 million in total donations annually. We are monitoring any possible impacts on social supermarkets.

[Baroness Walmsley (LD)]

My Lords, while the intention of the policy is welcome, does the Minister recognise that it may create a perverse incentive for businesses to divert surplus food away from community organisations and enterprises such as Community Shop, which provide both affordable food and wider support for vulnerable groups? Will he accept any evidence that may come forward as a result of this policy that this perverse incentive is happening and then consider possibly tweaking the policy?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. The short answer is yes, of course. We are hopeful that this new relief will help boost the supply of essential items to charities, enabling them to reach the people and communities who need them most. The relief will also make it easier for businesses to give surplus stock a second life, supporting families and communities across the UK and strengthening the circular economy by reducing waste and landfill. I hope very much that what the noble Baroness says is not the case. I understand the disappointment of some at not being eligible for this relief. It was important to maintain the structure of existing charity tax reliefs. However, as she asks, we will continue to monitor any potential impacts and accept the evidence. She might like to know that HMT officials will shortly be meeting with the sector to discuss this further.

--- Later in debate ---

[Baroness Walmsley (LD)]

My Lords, in relation to the question from my noble friend Lady Kramer, does the Minister agree that applying the new nutrient profiling model to surplus food diverted to various organisations could make it easy to carve out less healthy food from the VAT relief?

[Lord Livermore (Lab)]

I totally understand what the noble Baroness is saying. I do not think I said that it was not possible to do that; I said that we had not yet been presented with sufficient evidence to justify doing that. As I say, we will keep monitoring the situation carefully and we will maintain an open dialogue with the sector.