Trading and VAT

Trading and VAT are areas that can potentially cause confusion for fundraisers. The Institute recommends that organisations always seek professional advice on these matters.


Trading occurs through the purchasing or selling of goods and services. Charites can only undertake trading activity if they meet certain exemptions.

A distinction is made between primary and non-primary purpose trading to establish if the trading is part of the charity's primary purpose. Non-primary purpose trading is generally carried out with a sole purpose of raising money.

Charities wishing to carry out non-primary purpose trading will often need to set up a trading subsidiary.

Most charity shops are not considered as trading if the charities are selling donated goods - the charity is realising the potential of the donated goods. More information about charity shops is available from the Association of Charity Shops.

Find out more about the Association of Charity Shops


Institute briefing

The Institute has created a Charities and Trading briefing, which is an introduction to trading for charities and lays out guidance on when a charity can legally undertake trading, what exemptions are available or when they will need to consider other alternatives.

Read the Charities and Trading briefing


Other information sources

The Charity Commission has created CC35: Trustees, Trading and Tax, which also gives guidance and information on when charities can lawfully trade.

Read the Charity Commission guidance



VAT is a tax collected on business transactions, imports and acquisitions. It has many implications on fundraising organisations in regards to purchasing or providing goods and services and also on the potential VAT liability on certain income.

In some cases fundraising activity may be exempt. For example, VAT is not normally payable for one-off events. More information is available in the Institute briefing below.


Institute briefings

The Institute cannot advise organisations in regards to VAT implications, as it is a highly complex area with a number of variables. However, the Institute has created an introduction briefing on Fundraising and VAT, which outlines some of the issues that charities will need to consider.

Read the Fundraising and VAT briefing

Read the Fundraising Events and VAT briefing


Other information sources

HM Revenue and Customs (HMRC) has produced guidance on Charities and VAT, that takes charities through the general principles of VAT and the specific situations when it may apply.

Read the HMRC guidance

HMRC also have a dedicated VAT helpline that can be called on: 0845 010 9000. Fundraisers are strongly advised to seek professional advice.


Related links

Charity Tax Group - handle all tax issues affecting charities

HM Revenue and Customs - everything you need to know about taxation

HM Treasury - the UK's economics and Finance Ministry