Bridging the Gap: Advocating for VAT Reform in Charity Retail and Circular Communities






This is a guest post by
Billy Farrell,
Assistant Director of Retail at Chest, Heart & Stroke Scotland

 

In the journey towards sustainable living and environmental stewardship, the mantra of Reduce, Reuse, Recycle serves as our guiding light. Yet, amidst our efforts to repurpose goods and foster circularity, an unexpected obstacle emerges: Value Added Tax (VAT) regulations.

While upcycling remains zero-rated VAT, the transformation of items into new purposes often triggers VAT obligations, hindering the endeavours of charity shops, independent small makers, and Community Interest Companies (CICs) across the UK.

Repurposing, as a precursor to recycling, holds immense potential in fostering circularity within communities, particularly in Scotland. By prioritising repurposing before recycling, Circular Communities Scotland and Zero Waste Scotland advocate for a more sustainable approach to consumption and waste management. Repurposing not only diverts items from landfills but also conserves resources by extending product lifespan.

Members of Stitch the Gap

Unsung Heroes of the Stitch the Gap team

However, the imposition of VAT on repurposed goods poses a significant challenge to realising this vision. Activities such as painting a wardrobe remain zero-rated VAT, yet repurposing endeavours like transforming a shirt into a cushion cover suddenly incur VAT obligations. This regulatory hurdle stifles innovation and undermines the economic viability of repurposing initiatives, hindering progress towards circularity and environmental stewardship.

Charity shops emerge as unsung heroes in this narrative, serving as vital conduits for repurposing and reuse. Operating a network of forty shops across Scotland, Chest Heart and Stroke Scotland is deeply committed to promoting sustainability and circularity. Collaborations with entities like Stitch the Gap, a CIC specialising in repurposing donated linen into tote bags, exemplify their dedication to sustainable practices.

By providing a platform for pre-loved items to find new homes, charity shops contribute significantly to waste diversion and sustainable consumption practices. Yet, the VAT framework threatens to impede their efforts to repurpose goods effectively, limiting the impact of their sustainability initiatives.

To overcome these barriers, concerted action is necessary. Circular Communities Scotland and the Charity Retail Association, representing charity shop leaders and lobbying government respectively, must advocate for VAT reform. Aligning VAT policies with circular economy principles and providing exemptions or incentives for repurposing activities can foster innovation and bolster circular communities.

In conclusion, by addressing VAT challenges, we can unlock the full potential of repurposing and create a more sustainable and resilient future for Scotland and beyond. Let us unite in advocating for VAT reform, bridging the gap between charity retail and circular communities, and paving the way towards a greener, more sustainable world.

Group holding a Chest, Heart & Stroke Scotland Poster: No Life Half Lived

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