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HMRC internal manual

VAT Charities

Charity shops and sales of goods: Charity shops


Many charities operate shops in local high streets. These are often acquired on a short lease. If the landlord has opted to tax the charity will have to pay VAT; the option will not be disapplied because the charity is carrying on a business activity. However, the charity can recover the VAT if it is directly attributable to taxable supplies.


The staff may be paid or volunteers or a mixture of both and this does not affect the relief.


Only goods freely given to the charity can be sold at the zero rate. Bought in goods must be sold at the standard rate (unless those goods are zero rate by statute, such as food). Bought in goods may include items bearing the charity’s logo eg mugs, aprons etc. These are still liable to VAT.

Some merchandise may appear to be new and available in a range of sizes. However, do not assume that these goods are bought in; manufacturers may have donated end of lines or have goods that they have been unable to sell in their own outlets.

Restricted access

There are a number of shops, mainly those selling second-hand furniture, that restrict sales to certain categories of the public. The sales still qualify for zero-rating as long as the goods are made available to either disabled people or to people entitled to one or more of the following benefits:

  • Income Support
  • Housing Benefit
  • Council Tax Benefit
  • Job Seeker’s Allowance
  • Any element of Child Tax Credit other than the family element
  • Working Tax Credit
  • Universal Credit