VAT for charities

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1. Overview

As a charity you do not pay VAT when you buy some goods and services.

Community amateur sports clubs (CASCs) do not qualify for the same VAT reliefs as charities.

How to get VAT relief

You must prove to the person who鈥檚 selling the goods or services to you that you鈥檙e eligible for relief. You do not need to be registered for VAT.

When you must register for VAT

You must register for VAT if your charity鈥檚 VAT taxable turnover (the total value of everything you sell that is not exempt from VAT) is more than 拢90,000.

You can choose to register if it鈥檚 below this, for example if you want to reclaim VAT on your supplies.

Get help with VAT

Contact HM Revenue and Customs (HMRC) if you have questions about VAT for your charity.

2. 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 鈥榸ero rate鈥� on some goods and services.

What qualifies for the reduced rate

Your charity pays 5% VAT on fuel and power if they鈥檙e for:

  • residential accommodation (for example, a children鈥檚 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鈥檒l 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:

VAT-free goods from outside the UK

Charities do not pay VAT on goods imported from outside the UK as long as they鈥檙e 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.

3. How to claim VAT relief

To get VAT relief you must give your supplier:

  • evidence that you鈥檙e a charity
  • a written declaration or 鈥榗ertificate鈥� confirming that you鈥檙e eligible for the relief

Evidence of charitable status

This can be either your:

  • Charity Commission registration number
  • letter of recognition from HM Revenue and Customs (HMRC)

Scottish and Northern Irish charities must provide their letter of recognition from HMRC.

Written declaration

You must give your supplier an eligibility declaration or certificate when they sell you goods or services at zero rate VAT. There are examples of declarations and certificates for different goods.

If you鈥檙e buying building or construction services at zero VAT, the certificate must follow a set format.

The written declaration or certificate should be separate from the order form or invoice for the goods or services your charity is buying.

4. Charities and VAT registration

As a charity, you must register for VAT with HM Revenue and Customs (HMRC) if your VAT taxable turnover is more than 拢90,000.

You can choose to register if it鈥檚 below this, for example to reclaim VAT on your supplies.

If you鈥檙e a private school that鈥檚 a charity, you must check how to register for VAT.

If you鈥檙e registered for VAT you must send a return every 3 months.

Work out your taxable turnover

To work out your VAT taxable turnover add up the total value of everything you sell in a 12-month period that is not:

  • exempt from VAT
  • outside the scope of VAT

Check what VAT rate applies to your charity鈥檚 activities.

Exempt from VAT

You cannot charge VAT on exempt goods and services (such as the provision of welfare services). You cannot normally reclaim VAT on any goods and services purchased in relation to an exempt business activity.

You cannot register for VAT if all your business activities are exempt from VAT.

Outside the scope of VAT

Income from non-business activities is 鈥榦utside the scope鈥� of VAT (you cannot charge or reclaim VAT on them). This includes:

  • donations where nothing is given in return
  • grant funding given to support your charitable activities where nothing is given in return
  • activities where your organisation does not make a charge

Read more about what counts as a business activity.

Charging VAT

Once you鈥檝e registered you must charge VAT at the correct rate on everything you supply.

Reclaiming VAT

If you鈥檙e registered you may be able to reclaim VAT when you file your VAT Return.

You can reclaim the VAT you were charged on goods and services relating to your taxable business activities.

Exports outside the UK

If you supply goods outside the UK free of charge (for example as aid), you can treat this as a zero-rate business activity (0% VAT) so you can reclaim the VAT on any associated costs.