Autumn Budget 2025 recap – Reliefs and compliance considerations for charities
Hazra Patel, 13 March 2026
Hazra Patel, 13 March 2026
The Autumn Budget 2025 included several measures relevant to charities and the wider voluntary sector. While some announcements may offer potential benefits, others introduce additional compliance considerations.
A number of the changes are expected to take effect from April 2026, and trustees may wish to begin reviewing their financial plans and governance arrangements in advance.
One announced measure relates to the VAT treatment of certain business donations of goods to charities. Subject to final legislation and eligibility criteria, businesses donating qualifying goods for onward distribution or use in charitable activities may not be required to account for VAT on those items from April 2026. Charities that rely on donated goods may wish to monitor the detail of this change and consider how it could affect relationships with corporate donors.
The Government has also announced that the two-child limit in Universal Credit will be removed from April 2026. This policy change is intended to increase support for certain low-income families. The extent to which this may affect demand for charitable services will depend on how the changes are implemented and individual circumstances.
In addition, increases to the National Minimum Wage and National Living Wage were confirmed. While this may increase disposable income for some individuals, charities with paid staff will need to review payroll budgets and financial forecasts to reflect higher employment costs.
The Finance Bill 2025-26 also included amendments to the “tainted charity donation” rules, which are designed to prevent the abuse of charitable tax reliefs.
Under existing legislation, a donation may be considered “tainted” where:
Where a donation is treated as tainted, the associated tax relief may be denied to the donor.
The announced changes indicate that the rules may be expanded to place greater emphasis on the outcome and economic effect of arrangements, rather than focusing solely on the donor’s motive.
While the tainted donation rules primarily affect donors rather than charities, trustees should remain mindful of unusual or complex arrangements connected to large donations. Where a donation appears linked to tax-driven planning or structured transactions, it may be appropriate to seek professional advice.
Budget 2025 included measures to tighten IHT charity relief by addressing loopholes involving charitable trusts and community amateur sports clubs. Both lifetime gifts and gifts on death will only be exempt from IHT if they are given to UK-registered charities.
Additionally, legacies and income from an estate received by a charity will be classified as attributable income. This means legacy funds must be used for charitable purposes to avoid a tax charge from HMRC.
With many changes set to take effect in April 2026, trustees should consider:
Changes announced in the Autumn Budget often create both opportunities and compliance challenges for charities. Our Charity and Not-for-Profit specialists work closely with trustees and finance teams to interpret new legislation, assess its impact on governance and financial planning, and ensure organisations remain compliant with charity and tax regulations.
If you would like to discuss how the Autumn Budget measures may affect your organisation, please get in touch with our Charity Partner, Hazra Patel (hazrapatel@lubbockfine.co.uk).
Our specialists regularly share insights, guidance and practical updates to help organisations navigate change with confidence. If you’d like to receive future charity related updates from our team, you can sign up here.
