Why fair tax policy matters for charities

We champion a fair, modern tax system that enables charities to focus their resources where they matter most: delivering essential services, supporting vulnerable people, and strengthening communities. At a time when demand for charitable services is rising and financial pressures on organisations are intensifying, CTG works to ensure that tax policy recognises the unique role charities play in society.

We engage directly with HM Treasury, HMRC, Parliamentarians and policymakers to advocate for practical reforms, defend vital reliefs, and correct unintended consequences in legislation. Our campaigns are grounded in real world evidence and aimed at strengthening the sector’s financial resilience, operational efficiency and capacity to deliver for the communities they serve. These priorities are at the heart of our mission to deliver a fairer tax system for charities:

Our mission to deliver a fairer tax system for charities

Two people with glasses on holding papers and discussing them in an office environment.

Gift Aid: Protect the relief, modernise the rules and simplify the system

Gift Aid is one of the most important sources of income for UK charities, worth over £1.7bn a year. Protecting this relief is of paramount importance. However, a system designed in a paper‑based era now struggles to keep pace with digital fundraising, new payment methods and changing donor behaviour. Complexity and error cost the sector an estimated £200m each year.

CTG is working with the Government to prioritise the delivery of a streamlined, digital Gift Aid model that reduces errors, lowers administrative burdens and supports long‑term sustainability. We are also actively engaging with parliamentarians across political boundaries on the need for reform and welcome insight from our members on how Gift Aid can be made fit for the modern age.

  • Gift Aid should be simple, secure and future‑proof. By modernising the rules and systems now, we can protect a vital source of income for charities and ensure donors’ support goes further for the causes they care about.

    - Richard Bray, Finance Regulatory & Taxes Team at Cancer Research UK and CTG Chair

Zero‑rate VAT for all charity advertising, including social media

Charities rely on advertising not just to raise awareness and donations, but to reach people in urgent need. VAT relief on advertising is therefore a vital support, yet the current rules do not reflect how audiences consume information today. While traditional advertising is zero‑rated, HMRC’s interpretation excludes most social media advertising, leaving charities paying VAT on platforms that are now essential to modern outreach and fundraising.

This outdated distinction increases costs, restricts reach, and penalises charities for using the same digital channels that the rest of society depends on. At a time when online fundraising, digital campaigning, and targeted outreach are more important than ever, the VAT system must keep pace.

  • CTG is calling for a simple, modern fix: zero‑rate all charity advertising, regardless of medium. This reform would remove ambiguity, reduce administrative burden, and ensure charities can reach supporters and beneficiaries wherever they are; online, offline, and everywhere in between.

    - Luke Hall, Chief Executive of the Charity Tax Group

A social worker sat next to an older person in a residential care setting

VAT on social care: ending unfair costs for charity providers

Charities and other not‑for‑profit organisations play a vital role in delivering statutory social care services on behalf of local authorities. However, unlike councils delivering services in‑house, these providers cannot recover VAT, leaving them with irrecoverable VAT costs.

This disparity diverts public funding away from frontline care, increases the cost of delivery, and distorts commissioning decisions by favouring in‑house provision over specialist charity providers. As demand for social care continues to rise, the VAT system should not penalise organisations delivering essential services. CTG is calling for reform to extend recovery to charities and Community Interest Companies delivering statutory social care services on behalf of local authorities.

  • The current VAT rules mean that charities delivering social care can face costs that would not arise if the same services were delivered in-house by local authorities. Reform would improve fairness, support better commissioning decisions and ensure more public funding reaches the frontline services that people depend upon.

    - Trudi Amy, CTG Trustee