Here's what this change means for your charity.
What is changing with VAT on donation fees?
Previously, we charged 20% VAT on our donation fees, with some charities able to reclaim this cost. However, feedback from our charity community suggested that this was an annoying process and not all charities were able to reclaim the cost.
We have therefore implemented a zero-rating of our services in line with VAT rules. This means that VAT will be charged at 0%, so will effectively be removed from our fees. This will provide a cost saving to charities and will also eliminate a time consuming process of reclaiming VAT.
What impact will this have on fees?
Our fees themselves will remain the same, however as VAT will now be charged at 0% rather than 20%, we will pay out a larger amount to charities.
For example, our fee for Text Giving is 5% of any donation. Previously, for a £10 donation we would have paid out £9.40 after deducting a 50p fee and 10p VAT. Now, we will pay out £9.50 as we will no longer have to deduct anything for VAT.
Which fees does this change apply to?
VAT will be zero-rated on the following fees:
- Processing Text Giving donations
- Processing Text Raffles donations
- Processing Giving Pages donations
- Third-party processing fees (such as Stripe or PayPal)
VAT will continue to be charged at 20% on Text Journeys credits, though it may be possible for your charity to reclaim this cost.
You can see a full breakdown of our current fees here.
When will the change come into effect?
This change applies to any donations made from 1st January 2022 onwards. Fees on any donations made before this date remain subject to VAT, so you may still be charged some VAT on pay-outs in early 2022.
Do I need to do anything?
No. We will automatically implement this change, so there is no need to do anything.
Why is VAT still showing on my donation fees?
In the short term, you may still see VAT showing on donation fees in the Donr Dashboard. We are in the process of updating our various systems to address this change, so please rest assured that this is in hand and you won't be charged VAT on any donation fees for donations made since 1st January 2022.