Charities: VAT
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of the VAT registration threshold on small charities that generate income through educational public engagement activities.
Answered by Dan Tomlinson
At £90,000, the UK has a higher VAT registration threshold than any EU country and the joint highest in the OECD. This means the majority of UK businesses are not in the VAT system at all.
VAT is a broad-based tax on consumption. Once an organisation’s taxable turnover exceeds £90,000, it is required to register for VAT, and VAT-registered organisations can generally reclaim the VAT they incur on their business costs.
The Government 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 Gift Aid and an 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.
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