VAT free contactless donation units

The sale of contactless donation units to charities is zero-rated for VAT.

Way back in September 2020 we received notification from HMRC that they had decided that the purchase of contactless donation units is now zero-rated for VAT.

There are some very specific details around this but essentially if you are purchasing a charity (and if you’re not VAT registered, or unable to reclaim VAT) HMRC decided that the purchase of contactless donation units is zero-rated for VAT. This means that we don’t charge VAT on our units as long as the are only used for the collection of charitable donations.

More specifically the clarification on this is listed below:

ESC 3.3 relieves from VAT supplies to a charity of any of the following goods, including

(c) any form of receptacle which:

·       is manufactured specifically for the purpose of collecting donated money

·       is used solely for collecting money for charity

·       is, or will be, clearly marked as collecting for a named charity

·       can be secured by lock or tamper evident seal

Where such a receptacle is being supplied to a charity on a hire or lease basis, the charity is receiving a supply of services. It isn’t purchasing the receptacles themselves and VAT would be applicable. The zero-rating under ESC 3.3 is explicitly restricted to supplies of goods. Supplies of the hire or lease of such receptacles is, therefore, liable to VAT at the standard rate.