VAT Relief on Goods Donated to Charities

A new VAT relief will be introduced from 1 April 2026 to encourage donations of goods to charities. At present if a business makes a donation of goods to a charity, they must account for output VAT on the goods donated. 

Under the new rules, donations of goods up to £100 for general goods or up to £200 for key items which address digital poverty and household hardship (such as white goods, computers, mobile phones or tablets) appear to be exempted from the output charge, provided that the charity the goods are donated to is registered with HMRC and/or the Charity Commission/OSCR. More details on this are to follow.

Electric Vehicle Duty

An extra vehicle excise duty of electric/plug in hybrid cars will be introduced, although not until April 2028. It will be based on the number of miles driven in a year and declared and paid alongside the existing annual vehicle excise duty. The taxpayer will need to declare the number of miles they expect to drive in the forthcoming year, and pay duty based on this. Then the actual mileage will be submitted at the end of the year and any over/underpayment calculated, with balances due to the DVLA being payable then, and overpayments being carried forwards to future years. The submitted mileage will be checked to data available to the DVLA, such as data submitted when the car is MOTd.

Whilst the system sounds cumbersome, the rate of tax is 3p/mile for fully electric cars or 1.5p/mile for plug in hybrids, so for many drivers the tax charge might be quite modest.

VAT Digitalisation

Although details are currently limited, from April 2029, businesses will be obliged to issue all VAT invoices as e-invoices. This appears to fit with the move towards digitalisation of taxes. Further details on this will come in the 2026 budget.

Taxis

Whilst there had been some concern that the budget would amend VAT regulations to draw more taxi fares (even those charged by small self-employed taxi drivers who individually are under the VAT registration threshold) into being subject to VAT, this fear was not realised.

Some targeted anti avoidance measures are to be brought in from 2 January 2026 to stop operators taking advantage of a scheme called the Tour Operators Margin Scheme, which depresses the amount of income on which they pay VAT. This is essentially aimed at large operators such as Uber. 

Gambling Duties

Bingo duty (currently 10% of profits) will be abolished from April 2026, but Remote Gaming Duty will increase from 21% to 40%, and a new Remote Betting Duty of 25% will be introduced (but will not be levied on horse racing, which will remain at 15%).

This tax reform is aimed at minimising what the government see as the harms created by remote gambling.

Alcohol and Fuel Duties

Alcohol duty will see an increase in line with inflation on 1 February 2026, but the 5p fuel duty cut will remain in place until the end of August 2026.

Please click here to go back to our full Autumn Budget 2025 analysis.