Crowe UK outlines five key VAT and tax risks and opportunities for hospice charities, covering corporation tax on non‑primary purpose trading, Gift Aid compliance, fundraising event exemptions, building project VAT relief, and upcoming investment rules effective April 2026. The article highlights practical compliance steps and recent court rulings that may affect hospice operations.
From April 2026, hospices must demonstrate each investment is held solely for the charity’s benefit to qualify as an approved charitable investment; otherwise, investment income may be taxable.
If a hospice’s building project costs exceed £250,000 plus VAT (expected to rise to £600,000), the building’s use must be monitored for ten years, and any change in use requires adjusting the initial VAT reclaim.
Income from fundraising events is usually exempt from VAT and direct tax, but the exemption depends on factors such as the nature of the event and sponsorship arrangements; the Yorkshire Agricultural Society case recently tested this exemption.
Hospices must ensure Gift Aid declarations are correctly worded, valid, retained, and that digital declarations have an audit trail; retail Gift Aid scheme charges to donors are subject to VAT but allow VAT recovery on shop costs.
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UK GOV · about 18 hours ago
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