Charities lose nearly £2bn a year in VAT

Research commissioned by the Charity Tax Group and undertaken by London Economics shows that VAT places a significant burden on UK charities with irrecoverable VAT now costing them £1.8bn a year. The report The value of VAT reliefs for the charity sector also highlights the importance of VAT reliefs and exemptions for the sector.

In response the Charity Tax Group is calling on the government to introduce a new special charity VAT rate on purchases to complement the reduced and zero rates and the social exemptions. 

John Hemming chairman said: ‘Charities benefit from some important reliefs but also incur significant irrecoverable VAT. There are both opportunities and risks for the sector as we need to protect the reliefs that we have and we also need help with the increasing cost of irrecoverable VAT. 

‘For too long VAT has been...