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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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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’.
To get these reliefs you'll have to give your supplier:
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
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.
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.
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
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.
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.
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.
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.
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.
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:
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.
If your charity qualifies for the reduced rate for fuel and power, you will be excluded from the Climate Change Levy.
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.
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:
Qualifying goods include:
The repair, maintenance and installation of qualifying goods will also be zero-rated.
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:
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.
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:
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.
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.
For more help you can contact HMRC Charities by phone, email, or post.