A longstanding tax imposed on businesses making charitable donations has been scrapped following a rule change, according to accountancy and advisory firm Azets. The firm is reminding businesses that they can now donate goods to registered charities without incurring a VAT charge.

The development comes amid a period of declining charitable giving. The Charities Aid Foundation (CAF) recently revealed that public donations to good causes plummeted by more than £1.4bn last year. Millions of people said they can no longer afford to give, with just half of the population having donated to charity last year, down from 61 per cent a decade earlier.

Prior to the recent change, if a VAT-registered business made a donation having already reclaimed the VAT paid on those goods, the contribution was ordinarily treated as though the business had made a sale. This meant the business was typically required to pay VAT to HMRC based on the value of the donated goods.

Siobhan Holmes, an Azets partner specialising in not-for-profit accounting, said: “This is excellent news for charities, which we know are receiving less in donations. Essentially, HMRC has confirmed that for VAT-registered companies, no VAT will be due when eligible goods are donated free of charge to registered charities, where those goods are used to support people in need or are to deliver charitable services.

“The changes remove the VAT that previously applied because the business had reclaimed the amount when it originally bought the goods. However, this relief does include a monetary cap per item and charities cannot reclaim VAT on the donated goods.

“Many will be unaware that donations were liable for VAT, but there will also be companies that might have disposed of goods rather than donated them because of the tax they would have to pay.

“We want to get the message out to businesses that they can now donate to charities without falling foul of HMRC.

“Office supplies and equipment, or surplus stock, is often welcomed by charities and there will be other goods that will be of great use to them.

“For their part, charities should make a record of donated goods – especially any expensive items – and keep an audit trail.”

Azets has additionally cautioned charities and not-for-profit organisations to ensure their procedures and records are thoroughly robust in light of new and heightened compliance activity. HMRC has launched a programme of Structured Risk Reviews (SRRs) across the charity and not-for-profit sectors, indicating a more rigorous and data-driven approach to scrutiny.

Pub bosses have begged Rachel Reeves to show some humanity as venues are forced to cut staff hours and increase prices. From April 2026, retail, hospitality and leisure relief will be replaced with two lower business rate multipliers for properties with rateable values below £500,000. The lower tax rates will be funded by a higher multiplier applied to all properties with a rateable value of £500,000 or above.

Mike Latim, 40, is general manager of the Jolly Gardeners in Wandsworth. He told The Express: “We’re already struggling as it is, trying to break even. It’s crazy.” He added: “I don’t understand why they can’t freeze it. It’s what’s killing businesses.” Customers are being put off by price increases and more are choosing to buy booze from shops and drink at home instead, Mr Latim said, specifying that he has noticed a 40% to 50% drop in punters, if not more.

He has not increased the price of his pints for three years, but will have no choice but to do so by 10p or 20p in 2026.

“I wish I could make it a 5p increase, but if I did that I wouldn’t be in business anymore,” the Londoner said.

“I’ve had to reduce staff hours staff in general, even opening times. It’s not viable to stay open anymore at lunchtime.

“The whole city’s changing. We’re not really getting younger drinkers, they’d rather go to the off-license and chill in their house.”

In three to five years, punters could be charged £10 for pints, Mr Latim said, as he has seen adding that he could see the price even increasing to £15.

When asked if the Government could be doing more to help, he said: “I can understand the whole [economic] situation, but I do feel they could be doing a lot more.”

But even if that assistance were forthcoming for the sector, the manager thinks the situation is “so bad it’s almost impossible to recover from”.

He added: “We’ll never be back to the same way it was 10 or 20 years ago.

“Nobody really wants to pay for the experiences of going to a pub anymore.”

Nayak Dey, 41, owns the Old Sergeant down the road.

Sitting at one of his venue’s tables, he said he will have to increase his prices next year by about 70p a pint.

Mr Dey said: “Prices go up and we lose customers.

“Instead of people having five pints, they’ll go down to having three pints.”

On whether he felt supported by the Government, the landlord said: “It’s a very tough time. They’re not helping us at all.”

The publican would like to see business rates reduced, or venues like his supplied with small business relief.

In January, Mr Dey said he would have to cut the hours he gives his staff.

“It’s going to be harder, tougher,” he said.

On what he would say to Ms Reeves were she at his bar, he said it “wouldn’t be very nice”.

Mr Dey added: “It’s just there’s no support. It’s common sense, you know. A little bit of humanity would be good.

“It’s really, really tough. It’s not easy going. I’ve been doing this all my life, hospitality anyway.”

He unfortunately knows no different, he said.

The Government announced on Budget day that business rates for permanently lower RHL business rates multipliers, which will benefit over 750,000 RHL properties, including the shops and pubs

The Budget says the Treasury is expanding the Supporting Small Business scheme to businesses that were eligible for the Retail, Hospitality, and Leisure Business Rates Relief scheme, “protecting independent pubs and shops as they transition to permanently lower tax rates”.

This additional support is worth £1.3billion, ministers added.

The Campaign for Real Ale said after Ms Reeves outlined her latest plans: “Pubs and breweries in England are facing big increases in their business rates bills from April 2026 as a result of decisions taken in the Chancellor’s recent Budget, together with a rates revaluation.”

Brits have been warned that they face bills of tens of thousands of pounds as a result of one of Rachel Reeves’s tax hikes. The rate of business asset disposal relief (BADR), which reduces capital gains tax for the owners of firms selling up, will increase from 14% to 18%. James Howell, Managing Director at corporate law specialists Rubric Law, argues that, while this may look modest on paper, the reality for entrepreneurs is very different. For those selling companies valued around the £1million mark, delays of even a few weeks could mean a huge amount of additional tax exposure once the new rate comes into force, he warns.

Mr Howell said: “One of the biggest misconceptions sellers have is that a business sale is simply a negotiation on price. In reality, timelines are determined far more by the mechanics of the deal than by the number on the headline. Most delays have little to do with how much a buyer is offering, and everything to do with how well-prepared the business is behind the scenes.”

His firm consistently sees transactions stall due to property-related complications, the expert added, as issues such as outdated leases, missing landlord consents, unclear rights of occupation, or historic defects in documentation add significant time to the process.

“These matters are usually capable of being resolved, but rarely quickly, and almost never without cost or effort,” Mr Howell said.

Financial due diligence is another common “pressure point”, as if a business has incomplete, inconsistent, or poorly organised accounts, buyers will naturally raise more questions.

“This prolongs the transaction and often results in tighter warranties, indemnities, or even price renegotiations,” the specialist said.

“First-time sellers are frequently surprised by how much time is lost assembling information that should already exist in a sale-ready format.”

Mr Howell advised that as a rule of thumb, business owners planning to sell up should begin preparing three to six months before going to market.

“This buffer gives sellers more control over the pace of a transaction,” he said.

“In the current environment, control matters, particularly for those looking to complete before potential tax changes take effect in April 2026.”

“Recurring blockers include disorganised accounts, gaps in compliance, employment and contract irregularities, and unresolved property issues.

“The time required to address these challenges, even if only a matter of weeks, can materially impact when completion occurs and could, in some cases, push a seller into a less favourable tax position.”

Mr Howell added that owners of firms considering an exit within the next 12 to 18 months, an “up-to-date valuation and properly organised financial and operational records are no longer ‘nice to haves’; they are essential”.

“Being ready to move decisively when a serious buyer arrives doesn’t just make the process smoother, it can meaningfully influence the price achieved and the tax ultimately paid,” he concluded.

British pubs are poised to raise the price of food and drinks after measures announced in the Autumn Budget, Brits have been warned. According to a new landlord survey commissioned by the British Institute of Innkeeping, 90% of the 205 respondents said they would increase drinks prices.

Another 71% said they would increase food prices, 45% planned to cut opening hours, and 41% might cut services. The survey was conducted after Rachel Reeves Autumn Budget, and ahead of a raft of new business rate tax increases next year. A spokesperson said last week’s responses have “just been devastating” compared to previous member surveys.

From April 2026, retail, hospitality and leisure relief will be replaced with two lower business rate multipliers for properties with rateable values below £500,000. The lower tax rates will be funded by a higher multiplier applied to all properties with a rateable value of £500,000 or above.

To help the businesses facing the more significant bill hikes from this measure, the Government will be implementing a ‘Transitional Relief’ to cap the amount that bills increase as part of a £4.3billion support package.

But according to UKHospitality, the move will still see an average pub pay £12,900 more in business rates over three years, with rates climbing by 76%. A firm’s rateable value is based on the cost of renting its property for a year and is used to calculate a business’s rates bill.

Ms Reeves also announced an inflation-linked rise in alcohol duty and another increase in the National Living Wage.

In April, the hourly wage for workers aged 21 and above will increase by 50p to £12.71. Workers aged 18-20 will see an 85p increase to £10.85, while those under 18 and apprentices will receive a 45p raise, bringing their pay to £8 an hour.

Fewer than one in 10 respondents said their pubs would be profitable after the changes take effect next year, down from one in three, the group said.

Phil Thorley, who runs Thorley Taverns in Kent, said he was considering increasing the price of pints at his pub by 5 per cent to offset a £62,000 increase in business rates.

He said: “It just feels like another nail in the coffin of the British pub. It’s setting up a tsunami of costs that are hitting us and are simply impossible to pass on to the consumer.”

Since the start of the COVID-19 pandemic in 2020, the number of pubs in the UK has decreased by more than 2,000 to fewer than 39,000, according to Government data released at the end of last year.

A Treasury spokesman said: “We’re protecting pubs, restaurants and cafes with the Budget’s £4.3billion support package. Without this support, pubs would face a 45pc increase in the total bills they pay next year.”

A HM Revenue and Customs (HMRC) alert has been issued and it comes after an annoucement was made regarding those earning above £50,000. Whilst the advice doesn’t affect everyone, it’s crucial to verify whether you’re eligible to reclaim money, as one woman has highlighted the vital importance of tracking what you’re owed.

Small business accountant Lindie J has shared essential advice for those potentially entitled to additional funds, explaining how individuals could end up paying HMRC more than necessary. It’s particularly noteworthy as there are numerous expenses you can claim for, with drivers having previously discovered they could be overpaying unnecessarily.

Lindie warned: “Not keeping receipts is like trying to claim on insurance without proof. No evidence, no payout. Be honest with me, where are your receipts right now?

“The subscription invoice, the receipt for your new business phone, the train ticket, even the mileage log – that mileage log. Are they stuffed in a bag, fading in the glovebox or buried somewhere in a shoebox or somewhere where you don’t really know?

“I get it. You’re busy running your business, serving clients, juggling family and the last thing on your mind is a little bit of paper but, here’s the thing, not keeping receipts is like trying to claim on insurance without proof.”

She added: “HMRC, they can disallow those expenses and hit you with a higher tax bill. That’s why I always say make it easy for yourself. Snap the receipt as soon as you get it, and you’re done.”

Should you prefer not to accumulate them in a heap or shoebox, she mentioned there are digital applications available to store them all collectively in one location. This naturally makes perfect sense, given that numerous receipts are electronic nowadays.

For individuals eligible to claim business-related expenses, she emphasised it’s crucial to understand this, as it could determine whether you save money or miss out. According to Lindie, it’s absolutely essential information to bear in mind.

What you might not realise is that HMRC can raise your tax bill if you’re unable to supply receipts, or alternative valid evidence, for expenses you’ve claimed. Should you operate as a sole trader or limited company and HMRC launches an investigation into your tax return, you must demonstrate that all business expenses you deducted were legitimate.

Should you lack adequate evidence, HMRC possesses the authority to dismiss your claimed expenses. This results in raising your taxable profits and, consequently, amplifying your tax obligation.

The HMRC website declares: “If you prepare accounts for your business, you will need to choose the dates you keep records to and from. This would usually be the same dates each year.

“It may be easier to complete your tax return if the dates match the tax year (6 April to 5 April). This is because HM Revenue and Customs (HMRC) works out tax based on the tax year.

“If your accounts do not match this, you will need to allocate profits to two different accounting periods. If you do not prepare accounts, you will need to record your income and expenses for each tax year (6 April to 5 April).”

HMRC states you must maintain records of:

• All sales and income
• All business expenses
• VAT records if you’re registered for VAT
• PAYE records if you employ people
• Records about your personal income
• Your grants, if you claimed through the Self-Employment Income Support Scheme

For additional comprehensive details, check the website, which provides extensive guidance on expense recording procedures.