Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential merits of introducing VAT exemptions for (a) small charities and (b) volunteer organisations.

VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s second largest tax forecast to raise £171 billion in 2024/25. Taxation is a vital source of revenue that helps to fund vital public services including schools and hospitals.

Charities can already benefit from a reduced (5%) or zero rate of tax when purchasing some goods and services. More information about VAT relief for charities can be found here: VAT for charities: What qualifies for VAT relief - GOV.UK.

The Government has no plans to change this approach, but takes steps elsewhere in the tax system to ensure that charities receive treatment that takes account of their unique status and invaluable contribution. Our tax regime for charities, including exemption from paying business rates, is among the most generous of anywhere in the world, with tax reliefs for charities and their donors worth just over £6 billion for the tax year to April 2024.