How does the exemption work?
A charity can exempt admission charges/tickets for events it organises for the fundraising purposes.
What is a fundraising event?
In short, an event which is clearly organised and advertised with the objective of raising money for the benefit of a charity or qualifying body. Attendees will generally understand that fundraising is the primary reason for staging the event.
What kind of events are covered by the exemption?
HMRC gives the following examples:
- ball, dinner dance, disco or barn dance
- performance – concert, stage production and any other event which has a paying audience
- showing of a film
- fete, fair or festival
- horticultural show
- exhibition: art, history or science
- bazaar, jumble sale, car boot sale, or good-as-new sale
- sporting participation (including spectators): sponsored walk or swim
- sporting performance
- game of skill, contest or a quiz
- participation in an endurance event
- fireworks display
- dinner, lunch or barbecue
- an auction of bought in goods – an auction of donated goods is zero rated
Restrictions – Number of Events/Same location
A charity or its trading subsidiary may only stage 15 events of the same kind in at a single location in its financial year. If you hold 16 or more events of the same kind at the same location during your financial year none of the events will qualify for exemption.
Conversely, 20 art exhibitions staged by a national charity each in different towns in the same financial year would all qualify for the VAT exemption.
Events run over several days but at the same location
Where an event, such as a concert, is repeated on successive evenings each performance is a separate event and counts towards the maximum number of 15 allowed within the exemption. A single event which takes place at the same location for more than 1 day, such as a golf tournament, is accepted as 1 event.
De minimis rule for smaller fundraising events
The 15 event limit doesn’t apply to fundraising events where the gross takings from all similar events, such as coffee mornings, are no more than £1,000 per week.
Evidence to show the event was organised and promoted primarily to raise funds
There’s no single document that you must hold to demonstrate that the event was organised primarily to raise funds. Minutes of meetings, costing and similar documents should show that the main purpose for holding the event is to raise funds for charitable purposes or a qualifying body’s own benefit.
The event must be promoted in such a way that those attending the event are aware that its main purpose is to raise funds. Publicity material, tickets etc should therefore clearly refer to fundraising. For example
- fund-raising for
- in aid of
- help us to build
- help us to raise money for
Examples of publicity material, tickets etc, should be retained to support evidence of exemption.
Do charities need wholly-owned trading companies for fundraising activities?
Charity law governs which activities charities may carry out directly and which must be conducted through a trading company. For more information read charities and fundraising (CC20).
What fundraising activities can be carried out within a charity?
In a word be careful. You need to check the Charity’s constitution/objects to be sure it is permitted to undertake fundraising events. If in doubt you should consult the Charity Commission.
If you need any assistance on the VAT aspects associated with organising a fundraising event please contact us.