Charities running a charity shop need to consider a range of tax issues.
In terms of tax issues, charity shops benefit from exemption from corporation tax, zero rated VAT on the sale of donated goods, and business rates relief. Money raised by selling donated goods like clothes does not qualify for Gift Aid. However, by concession charities can act as the donor’s ‘agent’ to sell goods on their behalf if the owner will give the sale proceeds (minus any commission charged) to the charity as Gift Aid donation.
The Charity Retail Association also publishes a number of detailed guidance notes on the practical and administrative issues entailed in running a charity shop.
Charities may also be interested in Donated goods.
- Business rates – Property wholly or mainly used for charitable purposes
- Charitable relief from Community Infrastructure Levy (CIL)
- Consequences of non-primary-purpose trade
- Cost allocation
- Detailed guidance on Making Tax Digital for VAT: Notice 700/22
- Donated goods – Gift Aid
- Donated goods – VAT zero rating
- Employment Allowance
- General VAT principles
- Gift Aid Declarations
- Mixed primary and non-primary-purpose trading
- Primary-purpose trading
- Sale of donated goods
- SDLT – Charity relief
- Small trade concession
- Trades carried out by beneficiaries
- Use of trading subsidiaries and Gift Aid