Charity e-invoicing: does the 2029 mandate apply to you?

For most charities, whether e-invoicing applies comes down to one question: are you VAT-registered? From April 2029, VAT invoices issued between VAT-registered businesses, and to public bodies, must be e-invoices. A VAT-registered charity or trading subsidiary that invoices businesses or councils will be in scope as a sender. A small charity that is not VAT-registered issues no VAT invoices, so the sending obligation should not reach it. What it will have to receive is still open.

Charities and VAT: the starting point

VAT Notice 701/1 treats a charity, or its trading subsidiary, like any other business when it makes taxable sales:

• It must register if its taxable sales exceed the £90,000 threshold, and can register voluntarily below it. A charity with no taxable sales cannot register at all.
• Its income falls into three types: outside the scope (for example donations and most grants), exempt (for example qualifying fundraising events), and taxable.
• Many charities run taxable trading through a trading subsidiary, which may be VAT-registered in its own right.

VAT Notice 700 (paragraph 16.2.1) adds two rules that matter here. A VAT invoice is needed for standard- or reduced-rated supplies to VAT-registered customers. VAT invoices are not required for zero-rated supplies or for customers who are not registered.

Which charity invoices could be caught

Income or document	VAT invoice today?	In scope of the 2029 mandate?
Donations	No (outside the scope)	No
Grants freely given	No (outside the scope)	No
Funding that pays for a supply (for example a contract to deliver services)	Yes, if taxable and the charity is registered	Likely, if it is a VAT invoice to a business or public body
Sponsorship giving the sponsor significant benefits	Often taxable, so yes if registered	Likely
Commercial room hire, advertising sales, consultancy	Yes, if taxable and registered	Likely
Exempt fundraising events	No	No VAT invoice, so treatment not yet confirmed
Charity shop sales to the public	No (B2C)	No
Invoices received by a charity that is not VAT-registered	Suppliers may still issue VAT invoices	Not yet confirmed

"Likely" reflects the headline policy that all VAT invoices must be e-invoices. The detailed scope rules have not been published.

Grant or contract?

This distinction now has a second consequence. Notice 701/1 explains that funding is outside the scope if it is freely given. Conditions that only make sure the money is properly spent ("good housekeeping") do not turn it into payment for a supply. If the funder gets something in return, or a third party gets a directly linked supply, it may be consideration. If it is consideration and taxable, a VAT-registered charity needs a VAT invoice, which from 2029 means an e-invoice. Getting this right matters most with public-sector funders, which are themselves moving to e-invoicing.

Charity VAT reliefs on purchases

Certain goods and services are zero-rated or reduced-rated when supplied to charities, whether or not the charity is VAT-registered. Examples from Notice 701/1 include advertising, certain medical and rescue equipment, and fuel and power for qualifying use. The mechanism:

• The charity gives the supplier an eligibility declaration (examples are in the Notice 701/6 supplement) and evidence of charitable status.
• The supplier is responsible for applying the correct rate and keeps the declaration.
• For fuel and power used partly for qualifying purposes, the charity certifies the percentage, and the supplier apportions.

Nothing announced so far moves this paperwork into the invoice itself. The supplier's e-invoice would carry the zero or reduced rate, and the declaration would stay on file. Whether the UK specification adds a field to reference a relief or certificate is not yet confirmed. For VAT category codes, see UK VAT category codes in Peppol.

Property is similar. A landlord's option to tax does not apply to a building used solely for a relevant charitable purpose, if the tenant or buyer says so before the supply (VAT Notice 742A). See landlords and option to tax.

Charities delivering public contracts

Many charities deliver services under contracts with councils, the NHS or government departments. On public contracts, the buyer must already accept compliant e-invoices (Procurement Act 2023, section 67; regulation 70A in Scotland). From 2029, a VAT-registered charity's VAT invoices to those bodies must be e-invoices. See the council and central government guides.

What is not yet confirmed

• Whether organisations that are not VAT-registered must be able to receive e-invoices. This matters for thousands of small charities. See non-VAT-registered businesses.
• How VAT groups that include a charity's trading subsidiaries will be treated. See VAT groups and e-invoicing.
• Whether any support or simplification will be offered to small organisations. The consultation response recorded concerns about the cost to small and low-volume invoicers, and said the government will consider sector needs.

The roadmap due at Budget 2026 (28 October 2026) should answer some of these.

What to do now

1. Confirm your VAT position, and that of any trading subsidiary. Who is registered, and under which number?
2. List your income streams and mark which ones produce VAT invoices to businesses or public bodies.
3. Review funding agreements where the grant-or-contract question is borderline.
4. Ask your finance software provider about Peppol plans, especially if you invoice public bodies.
5. Use our scope checker for a quick first view.

This is general information, not tax advice. Charities should follow HMRC's guidance in Notice 701/1 or take professional advice for their own position. See also the mandate guide.