Home . uk charities lose nearly 2bn a year in vat

UK research shows charities lose nearly £2bn a year in VAT

December 15th, 2020

A new research commissioned by the Charity Tax Group [CTG] and undertaken by London Economics shows that VAT continues to place a significant burden on UK charities, with irrecoverable VAT now costing charities £1.8bn a year. The research also highlights the importance of existing VAT reliefs and exemptions for the charity sector, against a backdrop of calls for a widening of the VAT base both in response to Brexit and to pay for the cost of the COVID-19 pandemic.

VAT is a problem because charities cannot always pass on the cost of VAT to customers and which means they cannot recover the VAT on their purchases in full. Charity funds have to be used to pay VAT bills, rather than being used to help beneficiaries.