VAT for charities
What qualifies for VAT relief
Charities pay VAT on all standard-rated goods and services they buy from VAT-registered businesses. They pay VAT at a reduced rate (5%) or the ‘zero rate’ on some goods and services.
What qualifies for the reduced rate
Your charity pays 5% VAT on fuel and power if they’re for:
- residential accommodation (for example, a children’s home or care home for the elderly)
- charitable non-business activities (for example, free daycare for disabled people)
- small-scale use (up to 1,000 kilowatt hours of electricity a month or a delivery of 2,300 litres of gas oil)
If less than 60% of the fuel and power is for something that qualifies, you’ll pay the reduced rate of VAT on the qualifying part and the standard rate (20%) on the rest.
Qualifying fuel and power includes gases, electricity, oils and solid fuels (such as coal). It does not include vehicle fuel.
What qualifies for the zero rate
Find out about the conditions you must meet so that your charity pays no VAT (the zero rate) when you buy:
- advertising and items for collecting donations
- aids for disabled people
- construction services
- drugs and chemicals
- equipment for making ‘talking’ books and newspapers
- lifeboats and associated equipment, including fuel
- medicine or ingredients for medicine
- resuscitation training models
- medical, veterinary and scientific equipment
- ambulances
- goods for disabled people
- motor vehicles designed or adapted for a disability
- rescue equipment
VAT-free goods from outside the UK
Charities do not pay VAT on goods imported from outside the UK as long as they’re benefiting people in need by providing:
- basic necessities
- equipment and office materials to help run your organisation for the benefit of people in need
- goods to be used or sold at charity events
You can check which goods you can claim VAT relief for, as well as how to claim.