VAT reliefs on charity purchases

There are special VAT reliefs available on certain purchases made by charities which mean you either don't have to pay VAT or you pay a reduced rate of VAT - whether or not you're VAT registered. For each of these reliefs specific conditions have to be met.

There is also a special VAT relief available on certain goods and services bought with charitable funds for use by certain types of charities and certain eligible bodies.

If you want to take advantage of these reliefs you must provide your supplier with an eligibility declaration certifying that the conditions have been met.

This guide tells you more about the range of VAT reliefs available and provides links to more detailed guidance.

Note that the VAT reliefs for charities are not available for Community Amateur Sports Clubs (CASCs).

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Are you eligible for the VAT reliefs on charity purchases?

If you're a charity you may be able to buy the goods and services listed in this guide without paying VAT, or paying the reduced VAT rate of 5%. The goods or services you buy may have to meet certain conditions, and there may be restrictions on what they are to be used for.

Most of the VAT reliefs on purchases are available only to charities themselves - not their subsidiary trading companies or any other not-for-profit organisations.

However, there is VAT relief available on certain medical, veterinary, scientific and rescue equipment purchased with charitable or donated funds by certain eligible bodies. (These eligible bodies are certain types of charities and other organisations, such as research institutions, whose activities are not carried out for profit) .This relief is also available for anyone purchasing the qualifying goods for donation to an eligible body. For more details and information on which organisations are eligible bodies for this relief see the section below ’Charity-funded medical, veterinary, scientific and rescue equipment and ambulances’.

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How to get the VAT reliefs

To get these reliefs you'll have to give your supplier:

  • evidence that you're a charity (or, where appropriate, an eligible body)
  • a written eligibility declaration or certificate confirming that the conditions for the particular relief are met

Evidence of charitable status

Your charity must hold evidence that it is registered with the Charity Commission for England and Wales. If it is not registered with them (for example if it is exempt from registration with the Charity Commission or is a Scottish or Northern Ireland charity) then it must have evidence that it has been formally recognised as a charity by HM Revenue & Customs (HMRC) for tax purposes.

Your supplier will need

  • details of your Charity Commission registered number, or
  • evidence that you've been formally recognised by HMRC as a charity for tax purposes

Find out how to apply to HMRC for recognition as a charity for tax purposes

Eligible body status

To claim the relief for charity funded medical, veterinary, scientific and rescue equipment you must provide your supplier with sufficient information to satisfy him that you are an eligible body as described in section 3 of VAT Notice 701/6 or that you are purchasing the goods for donation to a body that is described in that section.

Eligibility declarations/certificates

To be able to sell the goods or services to you at the zero or reduced rate of VAT your supplier must be satisfied that the conditions for the particular relief have been met so he will ask you to complete a written eligibility declaration, also known as a certificate. For the buildings and construction VAT reliefs a certificate is required by law. For the other reliefs there is no set format but example certificates for your use are contained in the supplement to VAT Notice 701/6.

Go to the certificates in Section 18 of VAT Notice 708 Buildings and construction

Go to the example certificates in the supplement to VAT Notice 701/6

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Advertising and goods associated with donations

Your charity can advertise VAT-free in any medium that communicates with the public, such as a newspaper or television, providing the advert is placed on someone else's time or space. This means that if someone charges your charity for an advert, for example in their magazine or on a radio programme or for displaying a poster on their premises, they don’t have to charge you VAT.

The VAT relief does not cover costs for advertising in your own media - for example in your charity’s own magazine, on your own website, or on your own T-shirts etc.

Adverts qualifying for the relief can be on any subject, including staff recruitment. Charities can also purchase pre-printed collecting boxes, envelopes and appeal letters at the zero rate.

Low cost lapel stickers, emblems and badges that you might give as an acknowledgment of a donation can also be supplied to you at the zero rate. Find out more in VAT Notice 701/58 below.

If a printer produces a package of printed material for your charity, some of which is zero-rated and some of which is standard-rated, the printer may be able to zero rate the entire package. This is known as the ‘package test’. Find out more by following the link at the end of this section

Go to VAT Notice 701/58 Charity advertising and goods connected with collecting donations

Find out more about the package test in VAT Notice 701/10 Zero-rating of books etc

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Aids for people with disabilities

If your charity is purchasing certain goods and services to make available to disabled people for their personal or domestic use they can be zero-rated.

Go to VAT Notice 701/7 Reliefs for disabled people

Find out more about adapted motor vehicles for disabled people

Go to VAT Notice 701/6 Charity funded equipment

Equipment for producing talking books and newspapers

If your charity cares for the blind and the severely visually impaired, you can obtain zero rating for purchases of sound recording and reproduction equipment that has been designed or specially adapted for recording or reproducing speech.

In the case of reproduction equipment, zero rating will not apply where the equipment is available for use by anyone other than the blind or severely visually impaired.

The zero rating also covers radios and cassette recorders purchased for free loan to the blind, and the repair or maintenance of any of this equipment. The supply of cassette tapes is standard-rated.

For more information see paragraph 6.1.6 of VAT Notice 701/1 Charities.

Go to VAT Notice 701/1 Charities

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Buildings and construction

Construction of buildings

The construction of buildings and certain works to protected buildings, intended to be used by your charity solely for non-business purposes or as a village hall or similar, can be zero-rated subject to certain criteria being met. Zero-rating also applies to the construction of buildings intended to be used solely for a ‘relevant residential’ purpose (for example, a care home, hospice or student accommodation).

Your charity may also benefit from zero-rating for the construction of a ramp or widening of a doorway or passage to enable disabled people to gain access, or move about in, your charity building. It could also cover providing, extending or adapting a washroom or lavatory for disabled people.

Find out more about zero rating the construction of buildings in VAT Notice 708 Buildings and construction

Find out more about zero rating building work on facilities for disabled people in section 6 of VAT Notice 701/7 Reliefs for disabled people

First sale of, or long lease in, a building

The first sale or long lease of a building intended for use by a charity solely for non-business purposes or as a village hall or similar may be zero-rated. Zero-rating can also apply to buildings intended for use for a 'relevant residential purpose'. Details of the conditions that must be met for the zero-rating to apply are contained in section 4 of VAT Notice 708 Buildings and construction.

VAT Notice 708 Buildings and construction

Short lease or rent of a building

The short lease or rent of a building is normally exempt from VAT but the owner can choose to waive this exemption and ‘opt to tax’ his supplies of the building. However, if the tenant uses the premises solely for non business activities or as a village hall or similar, other than as an office, the option to tax will not apply and the lease or rent will remain exempt from VAT. Neither will the option to tax apply if your charity uses the building solely for residential accommodation. If your charity rents a building (or part of a building) and intends to use it for one of these purposes you should tell your landlord.

Find out more in section 3 of VAT Notice 742A Opting to tax land and buildings

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Fuel, power and water

Your charity has to pay VAT on supplies of fuel and power. However, you can claim the reduced rate of 5 per cent where fuel and power is supplied for a qualifying use. Qualifying use means either:

  • supplied for use in a dwelling or certain other types of residential accommodation, such as a children’s home, hospice or care home for elderly or disabled people
  • supplied for use in charitable non-business activities, such as free day care for disabled people

In addition, deliveries of certain small quantities of fuel and power are automatically treated as being for a qualifying use. For example electricity supplied at a rate not exceeding 1,000 kilowatt hours a month, or a delivery of not more than 2,300 litres of gas oil will qualify for the reduced rate whatever the use of the building.

If the fuel and power is supplied partly for a qualifying use, the supplier may have to apportion the supply. You should provide the supplier with a certificate declaring the percentage of the fuel and power that will be used for a qualifying purpose.

Find out how to qualify for reduced VAT on fuel and power used for charity non-business use

Climate Change Levy

If your charity qualifies for the reduced rate for fuel and power, you will be excluded from the Climate Change Levy.

Find out more about the Climate Change Levy

Water

Certain supplies of water for domestic and non-industrial use are zero-rated. Follow the link below for more information about water and sewerage services.

Find out more about water and sewerage services in Notice 701/16

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Charity-funded medical, veterinary, scientific and rescue equipment and ambulances

Certain goods and services can be zero-rated when purchased by eligible bodies (certain types of charities and certain other bodies) with charitable or donated funds. They may also be zero-rated when purchased by any individual, group or organisation for donation to an eligible body.

The following are eligible bodies for this VAT relief:

  • certain health bodies - for example National Health Service (NHS) trusts
  • research institutions whose activities are not carried out for profit
  • certain charitable institutions - for example, those that are approved to provide institutional care, or medical or surgical treatment, where the majority of the recipients are chronically sick or disabled
  • charities providing certain transport services, or rescue/first aid services for humans or animals

Qualifying goods include:

  • medical, veterinary and scientific equipment for use in medical or veterinary research, training, diagnosis or treatment
  • ambulances and certain other vehicles
  • certain goods for use by disabled people
  • certain rescue equipment
  • certain resuscitation training models

The repair, maintenance and installation of qualifying goods will also be zero-rated.

Find out more about the conditions for zero rating charity-funded equipment

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Medicinal products

If your charity is engaged in the treatment or care of people or animals, or in medical or veterinary research, you can purchase medicinal products at the zero rate of VAT.

A medical product is a substance presented as a medicine or an ingredient for a medicine, capable of being administered to people or animals for a medicinal purpose. The zero-rate covers medicinal products purchased by a charity for the purpose of testing the efficiency of those products.

Medicinal purpose means:

  • treating or preventing disease
  • diagnosing disease or ascertaining the existence or degree of a physiological condition
  • inducing anesthesia
  • preventing or interfering with the normal operation of a physiological function, whether permanently or temporarily, and whether by terminating, reducing, postponing, increasing or accelerating the operation of that function or in any other way

Find out more in section 6.1.9 of VAT Notice 701/1 Charities

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Drugs and chemicals

If your charity is engaged in medical or veterinary research, you can buy substances directly used for testing or for mixing with other substances in the course of that research, at the zero rate of VAT.

A substance can be natural or artificial and can be in solid or liquid form or in the form of a gas vapour. If the substance is purchased in the form of gas, the zero rating will also apply to the cylinder rental. You can find out more by following the link below.

Find out more in section 6.1.9 of VAT Notice 701/1 Charities

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Sea-going lifeboats and certain associated goods and services, including fuel

If your charity provides rescue or assistance at sea, you can purchase the following goods and services relating to sea-going lifeboats at the zero rate of VAT:

  • any vessel for use as a sea-going lifeboat, and its repair and maintenance
  • lifeboat launching and recovery equipment and its repair and maintenance
  • the construction and modification of lifeboat slipways and their repair and maintenance
  • spare parts and accessories for use with the above vessels, equipment and slipways
  • equipment of a kind ordinarily installed, incorporated or used in a lifeboat
  • fuel for use in the lifeboat itself (but not for launch/recovery vehicles or equipment)
  • any other services that meet the direct needs of the lifeboat

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VAT reliefs for purchases and sales abroad

Goods purchased from other European Union (EU) countries

If you are a VAT-registered charity and you buy goods from other EU countries, you won't normally have to pay VAT when you bring the goods into the UK. Instead, you account for any VAT due on your next VAT return - at the rate that would apply if your charity had bought the goods in the UK. Thus, if you buy anything that would be zero-rated if bought in the UK, there won't be any VAT due on the purchase.

Imports from outside the EU

Certain donated goods can be imported free of VAT from outside the Customs Union of the EU by charities and a range of other types of organisation. The Customs Union includes the EU, San Marino, Andorra and Turkey. The goods have to be basic necessities for needy people, goods to be used or sold at charity events for the benefit of needy people, or equipment and office materials to help run an organisation for the benefit of needy people.

Find out how charities can import certain goods VAT free

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Contacting HMRC Charities

For more help you can contact HMRC Charities by phone, email, or post.

Contact details for HMRC Charities

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More useful Links

Find out more about VAT for charities in VAT Notice 701/1

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