About Charity Shops
Charity shops are largely a British institution. They are retail outlets selling mainly second-hand donated goods to raise funds for their parent charities. Every year charity shops raise funds for a range of causes in the UK. They also function as a way of raising awareness of the parent charity.
Charity shops can only be set up by charities. In the 19th century the Salvation Army ran second hand clothing shops to provide the urban poor with cheap clothing. At the outbreak of World War Two, other charities such as the British Red Cross also started to operate shops as a way to raise money for the war effort and relieve hardship.
Modern charity shops as we understand them – retail units selling overwhelmingly donated goods to raise as much cash as possible for the parent charity – did not appear until after WWII. The first of these was opened by Oxfam in 1947 and is still in operation today. Oxfam had been swamped by donations from the public (mostly blankets and clothing) following its appeal for aid to alleviate the post-war situation in Greece. The success of this appeal yielded so many donations that it was decided to set up a shop in Oxford to sell a portion of these and to use the profits to further fund aid in Greece.
Many people shop in charity shops because they want to support the activities of the parent charity. A growing number of people use charity shops because of the environmental and ethical benefits of the reuse of goods, rather than buying completely new goods, or dumping used goods. Other people shop in charity shops because they like the range of goods available. Many charity shops stock clothes, furnishings, crockery, CDs and videos which are no longer available in other stores.
Many people visit charity shops to pick up retro and vintage clothing, in particular. Charity shops are also popular because the prices are often lower than other shops, even commercial second-hand shops.
More than 90% of charity shop sales are from donations. Many shops sell only donated goods, but others sell both bought-in and ethically produced ‘fair trade’ goods.
However, a shop must sell wholly or mainly donated goods in order to retain its status as serving a “charitable purpose”.
Most charity shops sell ladies’, men’s and children’s clothing, books, toys, ornaments, kitchenware, DVDs, music, computer games, furnishings and bric-a-brac. Some charity shops also sell furniture and electrical appliances, and some are specialist shops, such as bookshops, bridal or music.
What tax concessions do charity shops get?
Charity shops benefit from tax concessions under UK tax law because all the profits from a charity shop go to fund the work of the charity, which provides public benefit. Charity shops, therefore, serve a “charitable purpose”.
Charity shops benefit from exemption from corporation tax on profits, a zero VAT rating on the sale of donated goods and 80% mandatory non-domestic rate relief, on property taxes. This 80% relief is funded by central Government.
A further 20% rate relief is available at the discretion of local authorities. Other types of business are eligible for different sorts of relief from full business rates liability; these include small business rate relief, and relief for small shops in rural settlements.
Money that has been raised goes to the parent charity, to further their charitable work. Charity shops raise funding for a variety of good causes including medical research, overseas aid, environmental initiatives, supporting sick and deprived children, homeless people, mentally and physically disabled people, for animal welfare and for many other causes.