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HMRC internal manual

VAT Charities

Fund-raising: Sponsored participation events, held in the UK


Many charities organise walks, runs, swims and other similar sponsored events or arrange for teams of representatives to participate in these events in order to raise funds. If a charity is organising and promoting the event it may be able to take advantage of the fund-raising exemption.

What if the event does not qualify for the fund-raising exemption?

Many events that individuals, or teams, take part in to raise funds for charity will not fall within the fund-raising exemption. For example a commercially organised sports event such as a marathon, half marathon or triathlon. It is important to consider the VAT implications of the income a charity may receive from such events.

In many cases the charity will pay for places within a commercially organised event and then offer those places to individuals. Where a charity allows individuals to take part in the event regardless of the amount they raise and the individuals do not receive any benefits in return, the monies raised are regarded as donations and are therefore outside the scope of VAT.

The following are not considered to be benefits:

  • provision of free training and health advice
  • a free t-shirt, running vest or similar that clearly portrays the charity the individual is taking part on behalf of
  • free massages and support for physical well-being during the event
  • free pre-event meeting, which may include free professional advice or support, a simple meal, energy drinks and encouragement from the charity and other participants
  • free post-event meeting, which may include medical treatment or advice, changing facilities, light refreshments and gives the charity an opportunity to thank participants.

However many charities will vary conditions and incentives in relation to the places they have paid for, some examples follow.

  1. Entry and registration fees

Any amount described as an entry fee or registration fee that participants have to pay to gain entry to the event will be taxable at the standard rate.

  1. Minimum sponsorship

Some charities insist that the participants raise a minimum amount of sponsorship before they can take part in the event. If there is such a condition and it is, in practice, enforced ie participation is denied to those who do not raise the minimum amount, this is effectively an entry fee and is taxable at the standard rate. In these circumstances any payment in excess of the minimum sponsorship is regarded as a donation and is outside the scope of VAT.

  1. Pledges or commitments to raise specified amounts

If a charity asks individuals to ‘pledge’ or ‘commit’ to raise a certain amount of sponsorship, but do not insist on any payment before allowing the individual to take part in the event, the total amounts raised can be treated as donations and are outside the scope of VAT.

A charity may encourage individuals to pass on sponsorship monies as they receive them and before the event takes place. Providing they do not insist on receiving a certain amount before allowing the individual to take part, such amounts are donations and outside the scope of VAT.

  1. Benefits and incentives

Benefits and incentives other than those listed above may be provided. For example, some charities will provide free travel and/or accommodation or other benefits such as gifts of watches or bikes to participants (however, if such items are offered as prizes to highest fund-raisers please see example (e) below). If a charity provides such benefits or incentives the amount raised by the participant is a consideration for the benefit or incentive and is therefore taxable.

  1. Prizes

Some charities offer prizes to top fundraisers. These are not benefits and do not affect the VAT treatment of income from participants.

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What is the position when sponsored participation is not via a place paid for by a charity?

Where a participant raises sponsorship on behalf of a nominated charity but does not participate as one of the charities paid entries, for instance because there is free entry to the event or if the participant has personally paid the entry fee directly to the organiser of the event, all monies raised will normally be regarded as donations and be outside the scope of VAT. However if there are any arrangements or agreed conditions etc between the charity and the participant they may have VAT implications and should be considered in this context on an individual basis.

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Are there any input tax considerations for the charity?

The conditions imposed by the charity or the benefits and incentives the charity offers participants may have an impact on the amount of VAT the charity can recover on related expenses.

Where a charity has purchased a place in a commercial event, and makes an onward taxable supply of that place by insisting on a payment from the participant, such as a registration fee or minimum amount of sponsorship, then the charity can reclaim in full the input tax it has incurred on purchasing the place. We expect the charity to make it clear to the participant that the minimum payment is for entry to the event.