Charge, reclaim and record VAT
When not to charge VAT
You cannot charge VAT on exempt goods or services.
If you buy or sell an exempt item you should still record the transaction in your general business accounts.
Some examples of VAT-exempt goods and services are:
- financial services, investments and insurance
- garages, parking spaces and houseboat moorings
- property, land and buildings
- education and training (excluding private schools)
- healthcare and medical treatment
- funeral plans, burial or cremation services
- charity events
- antiques
- gambling or lottery tickets
- sports activities
Read the full list of VAT exempt goods.
Goods and services that are ‘out of scope’
Some goods and services are outside the VAT tax system (‘out of scope’) so you cannot charge or reclaim the VAT on them. For example:
- goods or services you buy and use outside of the UK
- statutory fees, like the London congestion charge
- goods you sell as part of a hobby, like stamps from a collection
- donations to a charity, if given without getting anything in return
Charging VAT to charities
VAT-registered businesses can sell certain goods and services to charities at the zero or reduced rate of VAT.
Find out what qualifies for the reduced rate.
If you’re a VAT-registered business, it’s your responsibility to check the charity is eligible, and to apply the correct rate.
Community amateur sports clubs do not qualify for VAT reliefs for charities.
Check the charity is eligible
Ask the charity to provide you with evidence that they’re a charity. This can be either:
- their Charity Commission registration number
- a letter of recognition from HM Revenue and Customs (HMRC) if they’re not registered with the Charity Commission (for example if they’re a charity in Scotland or Northern Ireland)
Get a written declaration
You also need to ask the charity to give you a written declaration or certificate confirming it meets the conditions for the particular VAT relief.
Charities must follow a particular format for the declaration or certificate. The declaration must be separate from the order form or invoice.
You must keep any declarations or certificates for at least 4 years.