Introduction: A New Chapter for Charity VAT Exemptions
For charities and non-profit organisations across the UK, fundraising events are not just about raising money — they are about building community, showcasing social impact, and sustaining vital charitable services. Whether it’s a charity gala dinner in London, a sponsored marathon in Manchester, or a cultural festival hosted by a UK foundation, these events play a pivotal role in raising both awareness and resources.
However, the tax treatment of charity fundraising events has always been complex and heavily scrutinised by HMRC. VAT exemptions for charities, in particular, have long caused confusion among trustees, charity finance officers, and high-net-worth donors who sponsor or host such events.
In January 2025, the Upper Tribunal ruling in the Yorkshire Agricultural Society case ([2025] UKUT 00004) reshaped the VAT landscape for UK charities. The decision confirmed that VAT relief for fundraising events can apply even when fundraising is only one of multiple primary purposes — for example, when an event is held partly to promote education or cultural awareness alongside raising funds.
HMRC responded with Revenue and Customs Brief 3 (2025), providing updated guidance on VAT for fundraising events. This clarified that charities, foundations, and other qualifying bodies may claim VAT exemption provided that fundraising is a genuine purpose of the event, even if it shares equal importance with another charitable objective.
At CIGMA Accounting, our specialist charity accountants in London, Wimbledon, and Farringdon work closely with trustees, charity directors, and high-net-worth donors to ensure fundraising events are structured to:
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Maximise VAT efficiency and minimise tax leakage.
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Stay fully compliant with HMRC VAT charity rules.
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Integrate VAT relief into broader charity tax planning and inheritance tax strategies.
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Support both UK-based charities and international non-profits with UK fundraising arms.
This proactive approach allows our clients not only to protect more of their funds but also to ensure that every pound raised at a fundraising event goes further toward their charitable mission.
Section 1: What Changed in 2025?
The Tribunal Decision
Previously, to qualify for VAT relief on charity fundraising events, HMRC required that an event be organised and promoted solely with fundraising as its primary purpose. This strict interpretation often created problems for charities, trusts, and non-profit organisations, particularly when events had a dual or blended objective. For example, a charity arts festival in London designed to both raise funds and promote cultural awareness might have been denied exemption under the old rules. Similarly, a charity education conference that inspired learning while also raising funds could fall outside the VAT exemption scope.
The Upper Tribunal decision in the Yorkshire Agricultural Society case ([2025] UKUT 00004) reshaped this position and provided much-needed clarity. It confirmed two key principles for charities, trustees, and high-net-worth donors:
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Multiple primary purposes are now permitted.
The Tribunal ruled that an event can have more than one primary charitable purpose. As long as fundraising is one of those purposes, the event may still qualify for VAT exemption under UK charity VAT rules. This widens the relief to include events that are equally focused on education, arts promotion, cultural engagement, or social awareness, while also raising funds. -
Promotion requirements have been relaxed.
Under the old rules, HMRC expected events to be promoted explicitly as being “primarily” for fundraising. The Tribunal confirmed this was too narrow. Now, events must still be advertised as fundraising activities, but they do not need to emphasise fundraising as the sole or dominant reason. For example, a London gala dinner promoted as both a fundraiser and a cultural showcase can still benefit from the VAT exemption.
This ruling, combined with HMRC’s updated guidance in Revenue and Customs Brief 3 (2025), significantly broadens the scope of VAT relief for charities in the UK.
At CIGMA Accounting, our team of specialist charity accountants in London helps charities, foundations, and non-profit organisations interpret these updated rules. We ensure that fundraising events — from black-tie dinners in Mayfair to community cultural festivals in Surrey — are structured in a way that maximises VAT relief while remaining fully compliant with HMRC.
HMRC’s Position Post-Decision
Following the Upper Tribunal ruling in January 2025, HMRC has issued updated guidance making clear that, while the scope of VAT relief for charity fundraising events has widened, the exemptions are not a “free pass.” Charities, trustees, and their accountants must still demonstrate that fundraising is a genuine purpose of the event, rather than simply a cover for commercial trading activities.
Key points of HMRC’s stance include:
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Fundraising must remain genuine.
Events must clearly show that raising money for charitable purposes is a real and central objective. Activities designed primarily for profit, or that compete directly with commercial providers, will not qualify for the VAT exemption. -
Evidence is essential.
To defend VAT exemption claims, charities should maintain strong documentary evidence — including event programmes, promotional material, board minutes, and trustee resolutions — that confirm the fundraising purpose. HMRC expects organisations to demonstrate not just intent, but clear communication to attendees that the event supports a charitable cause. -
Restrictions still apply.
The longstanding 15-event annual limit remains in force: if a charity holds 16 or more of the same type of event in the same location during a financial year, all such events become taxable. In addition, the anti-competition clause continues to apply, ensuring that tax relief does not unfairly disadvantage commercial providers running similar events.
Section 2: Why This Matters for Charities
Financial Impact of the VAT Relief Clarification
The implications of the 2025 Upper Tribunal decision on VAT for charity fundraising events are not just legal — they are deeply financial. With VAT charged at 20% on ticket sales, sponsorships, auctions, or even branded merchandise, the cost burden on charities has historically been significant.
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For example, a London charity gala dinner generating £250,000 from ticket sales would normally face a £50,000 VAT bill if the exemption did not apply. That £50,000 represents funds that could have financed a new outreach programme, funded dozens of scholarships, or supported vital community services. With the exemption, that money stays within the charity’s mission.
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For smaller community events — such as a regional music festival or a heritage open day — the exemption could mean the difference between breaking even and sustaining a loss. Many smaller charities in the UK operate with slim margins, and avoiding VAT can keep their fundraising sustainable.
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For high-net-worth donors and corporate sponsors, the ruling reassures them that a higher percentage of their contributions will directly benefit the cause, rather than being eroded by tax.
Strategic Impact for UK Charities
The Tribunal’s confirmation that fundraising does not have to be the sole primary purpose of an event has given charities greater strategic flexibility. This means they can design and deliver multi-purpose fundraising events that combine fundraising with education, culture, awareness-raising, or community engagement — without risking VAT exemption.
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An arts charity in Westminster can now host a gala that both raises funds and promotes cultural heritage, knowing VAT relief may still apply.
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A medical research charity can run a scientific conference with ticket income — simultaneously educating professionals and raising funds for future research — without automatic disqualification from VAT relief.
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A heritage trust can hold estate open days framed around both community engagement and fundraising, with VAT exemption still possible.
This broader scope empowers charities to align their fundraising activities more closely with their mission statements, while still enjoying significant tax relief.
At CIGMA Accounting, we work with charity trustees, finance officers, and HNW donors to model both the financial savings and strategic opportunities created by these VAT changes. Our role is to ensure that every event — whether a £5m London gala or a £20k community fundraiser — is structured for maximum tax efficiency and regulatory compliance.
Section 3: What Qualifies as a Fundraising Event?
Examples of Events That Qualify for VAT Relief
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Charity Gala Dinner in London – A black-tie event that raises significant funds for cancer research while also raising public awareness. Because fundraising is a primary purpose, VAT exemption can apply.
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Cultural Festival Promoting Diversity – A heritage or arts-based festival that not only celebrates cultural identity but also channels proceeds into youth programmes. Even though cultural promotion is also a main purpose, fundraising remains central, so exemption is possible.
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Sponsored Walk or Marathon – Designed to raise funds for a local hospital or charity, while at the same time promoting healthy living within the community. This dual-purpose format fits the new HMRC interpretation, allowing VAT exemption.
Examples of Events That Do Not Qualify for VAT Relief
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Regular Trading Activities – Continuous operations like charity shops, cafés, or weekly fairs are considered trading, not fundraising events. These do not fall under the relief.
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Corporate-Style Commercial Events – For example, a business conference or expo run by a charity where fundraising is only incidental to commercial objectives. HMRC scrutiny here is strict, and VAT exemption will not apply.
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Exceeding the 15-Event Limit – The VAT exemption applies to a maximum of 15 fundraising events per year in the same location. If a charity hosts 16 or more, all events become taxable — a critical compliance risk.
The Quantified Impact of VAT Relief on Charity Events
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Large-Scale Gala Dinner
A London-based cancer charity hosts a black-tie gala with ticket sales of £250,000.-
Without VAT exemption: £250,000 × 20% VAT = £50,000 lost to tax.
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With exemption: The full £250,000 goes to research, saving £50,000 per event.
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Over 10 years of annual events, that’s £500,000 preserved for charitable use.
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Cultural Festival Case
A heritage trust organises a multi-purpose cultural festival raising £100,000 in ticket sales and sponsorship.-
Exemption applied: £20,000 VAT saved each year.
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Over 5 years, £100,000 saved — effectively funding an entire youth programme without seeking new donors.
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Community Sponsored Walk
Local charity event raises £25,000 from participants.-
Without exemption: £5,000 VAT liability eats into proceeds.
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With exemption: All funds available for community health projects.
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For smaller organisations, this saves the difference between survival and deficit.
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Strategic Takeaway: For high-net-worth donors, trustees, and charity finance directors, these numbers highlight why structuring events correctly under the new VAT rules is vital. Relief isn’t just compliance — it’s hundreds of thousands, even millions, redirected to charitable impact instead of HMRC.
At CIGMA Accounting, we specialise in charity VAT advisory, ensuring events remain compliant while maximising tax efficiency. Our VAT specialists for charities help trustees and finance directors design fundraising events that clearly meet HMRC’s criteria, evidence compliance through proper documentation, and maximise VAT efficiency without risking penalties.
Section 4: Common Pitfalls & HMRC Scrutiny
Even though the Upper Tribunal ruling has widened the scope for VAT exemptions, HMRC has made it clear that charities cannot treat this as a “blank cheque.” Compliance remains at the forefront, and poorly structured fundraising events may still lose exemption status.
4.1 Evidence is Essential
Charities must document fundraising as a genuine purpose of the event. HMRC expects clear evidence, such as:
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Event brochures and marketing materials showed that fundraising was part of the promotion.
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Board minutes or trustee meeting notes highlighting the charitable fundraising objective.
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Clear separation in financial records between fundraising proceeds and other income streams.
Without this level of evidence, HMRC may reclassify the event and apply 20% VAT on ticket sales, sponsorships, and merchandise, leading to unexpected liabilities.
4.2 Normal Trading Does Not Count
VAT exemption is not designed to cover routine trading activities. HMRC specifically excludes:
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Weekly or monthly markets.
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Regular café or shop operations run by the charity.
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Semi-continuous fairs or commercial-style activities.
These fall under standard business VAT rules, not fundraising exemptions.
4.3 Overuse of the Relief
The 15-event annual limit remains one of the most common pitfalls. If a charity organises more than 15 events of the same kind in one location during a fiscal year, all events become taxable, not just the 16th.
Example:
A London arts charity hosts 16 fundraising concerts at the same theatre. By exceeding the threshold, VAT becomes payable on all 16 concerts, wiping out tens of thousands of pounds in potential relief.
4.4 HMRC Scrutiny Is Increasing
With the new 2025 VAT reforms, HMRC is monitoring charity events more closely, particularly those involving high-value sponsorships, ticket sales above £100,000, or cultural/heritage events.
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Non-compliance can trigger penalties and reputational damage.
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Trustees are expected to ensure charity VAT compliance as part of their fiduciary duty.
Key Takeaway: VAT relief for charity fundraising events is generous but fragile. Without proper records, limits, and compliance checks, charities risk losing exemptions and facing penalties.
At CIGMA Accounting, our London charity VAT advisors work with trustees, HNWI donors, and charity finance directors to design events that pass HMRC scrutiny while maximising VAT efficiency.
Section 5: How Charities Can Maximise Relief in 2025
The 2025 VAT reforms create both opportunity and risk for UK charities. Those who plan carefully can save substantial amounts, while those who overlook the details may lose out. Here’s how to maximise relief:
Step 1: Document Fundraising Intent
HMRC has made clear that evidence is the cornerstone of VAT exemption. Charities should:
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Record trustee or board meeting minutes that explicitly state fundraising as a purpose.
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Preserve event brochures, digital campaigns, and ticketing communications that highlight charitable fundraising.
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Separate fundraising income streams from any commercial activity in the accounts.
Without this evidence, even the most genuine charity event may be challenged.
Step 2: Manage Event Numbers
The 15-event annual limit per location is a common pitfall. Exceeding it means all events in that venue become taxable. To avoid this:
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Keep a centralised log of all fundraising events.
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Rotate venues to prevent breaching the per-location cap.
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Consider grouping smaller fundraising activities into fewer, larger events for efficiency.
Step 3: Combine Reliefs Strategically
VAT exemption should not be viewed in isolation. It can be layered with other charity tax reliefs to multiply benefits:
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Gift Aid on donations — securing an extra 25p for every £1 donated.
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Business Rates Relief — up to 80–100% reduction on qualifying charity premises.
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Corporate sponsorship structuring — ensuring that income from business partnerships is treated correctly to maximise relief.
By aligning these strategies, charities can unlock six-figure savings on large-scale fundraising campaigns.
Step 4: Seek Expert Guidance
Charity tax is a specialist field where subtle missteps can cost dearly. Working with experienced charity accountants in London ensures:
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Events are structured to qualify under HMRC’s fundraising VAT rules.
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Evidence files are maintained for audit readiness.
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VAT relief is integrated into wider charity tax planning, including inheritance tax planning for HNWI donors and strategic use of charitable trusts.
Key Takeaway: Maximising VAT relief in 2025 requires proactive structuring, documentation, and strategic use of other reliefs. For charities handling high-value events or aiming to attract high-net-worth donors, professional advisory support is no longer optional — it’s essential.
At CIGMA Accounting, our London charity tax advisors help charities, trustees, and foundations not only stay compliant but also turn tax rules into strategic advantages for long-term impact.
Section 6: Implications for HNW Donors & Trustees
For high-net-worth individuals (HNWIs), trustees, and family offices, the updated VAT relief on charity fundraising events represents more than just a technical tax adjustment — it’s a chance to align philanthropy with smart tax planning.
1. Donations Go Further
With reduced VAT leakage, HNWI donations and sponsorships stretch further. A £100,000 gala donation that previously lost £20,000 to VAT can now see the entire amount flow to frontline causes, provided the event qualifies. This makes large-scale giving more efficient and impactful.
2. Events Aligned with Lifestyle & Legacy Goals
Many wealthy families want their giving to reflect their personal values — art, culture, education, healthcare, or environmental causes. The tribunal’s confirmation that fundraising can be one of several primary purposes allows donors to support multi-purpose events that align with both personal passions and charitable objectives, without losing VAT relief.
3. Cross-Border Opportunities
International families, trusts, and non-doms often host events in the UK while managing wealth globally. With clearer HMRC guidance, trusts and family foundations can:
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Structure fundraising dinners, auctions, and exhibitions with confidence in VAT exemption.
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Layer reliefs (e.g., Gift Aid, Business Rates, international tax treaties) for maximum efficiency.
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Strengthen their position as responsible global philanthropists.
4. Trustee Responsibilities
Trustees remain legally responsible for ensuring compliance with HMRC’s charity VAT rules. That means:
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Documenting fundraising intent (minutes, brochures, invitations).
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Monitoring event frequency and location limits.
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Ensuring that activities do not cross into taxable trading.
Failing to do so risks personal liability, reputational damage, and clawback of relief. This is why trust advisory London services are critical for HNW families using philanthropic trusts.
Key Insight for Wealthy Families: These reforms mean that charity fundraising events are no longer just a tax liability risk — they are now a strategic tool in HNWI tax planning, legacy planning, and international philanthropy.
At CIGMA Accounting, we help high-net-worth donors, trustees, and family offices design events, structures, and giving strategies that maximise VAT relief while preserving legacy objectives.
Section 8: Frequently Asked Questions (FAQs)
Q1: Can a charity fun run now be exempt from VAT?
Yes — if fundraising is a primary purpose, even alongside promoting health or community activity.
Q2: Is there still a limit on exempt fundraising events?
Yes — 15 events of the same type in the same location per year. Exceeding this removes relief.
Q3: What counts as evidence for HMRC?
Event programmes, marketing, board decisions, and post-event reports showing fundraising as a key purpose.
Q4: Do sponsorships and donations count as exempt income?
Yes — if linked to a qualifying fundraising event.
Q5: Can non-charitable trading subsidiaries benefit?
No — relief applies only to charities and qualifying bodies, not to trading subsidiaries.
Section 9: CIGMA Accounting’s Charity VAT Expertise
At CIGMA Accounting Ltd, we combine technical expertise with hands-on advisory for UK charities. Our charity accountants in London, Wimbledon, and Farringdon specialise in:
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VAT compliance for fundraising events.
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Bespoke charity tax planning.
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Structuring events to minimise HMRC risk.
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Strategic planning for trustees, donors, and HNW families.
Whether you are hosting a fundraising dinner, charity auction, or cultural festival, our discreet advisory ensures your event is both compliant and tax-efficient.
Conclusion — From “Loophole” to Legitimate Legacy Tool
Recent headlines talk of a “VAT loophole” for charities, but the reality is a carefully regulated exemption backed by law. The 2025 reforms expand opportunities, but also require careful structuring, documentation, and compliance.
Handled correctly, these rules can mean tens of thousands of pounds saved for every major event — money that goes directly back to charitable causes.
If your charity or foundation runs fundraising events, now is the time to review your VAT exposure. Contact CIGMA Accounting today to schedule a Charity VAT Strategy Review and ensure your events remain both impactful and tax-efficient.
