In this section:
- VAT for charities and not-for-profit organisations: introduction
- VAT treatment of common types of charity income
- How VAT applies to fundraising events
- VAT reliefs on charity purchases
- Zero-rated VAT on charity-funded equipment
- Reduced rate VAT on fuel and power used for charity non-business use
- How charities can import goods VAT-free
- Charging VAT if you make supplies to charities
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 other 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).
On this page:
- VAT relief on purchases: introduction
- Advertising and goods associated with donations
- Aids for people with disabilities
- Construction
- Fuel and power
- Charity funded medical, veterinary, scientific and rescue equipment, and ambulances
- Medicinal products
- Drugs and chemicals
- Lifeboats and certain associated goods and services
- VAT reliefs for purchases and sales abroad
- Contacting the HMRC Charities Helpline
- More useful links
VAT relief on purchases: introduction
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 per cent. The goods or services may have to meet certain conditions, and there may be restrictions on what they are to be used for.
Most of these 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 and scientific equipment purchased with charitable or donated funds by certain eligible bodies (certain charities and other organisations such as research institutions whose activities are not carried out for profit). This relief is also available for anybody purchasing the qualifying goods for donation to an eligible body. For more details see the section below ’Charity-funded medical, veterinary, scientific and rescue equipment and ambulances’.
What you’ll need in order to claim the VAT relief
To get these reliefs you’ll have to provide your supplier with evidence that you are a charity (or where appropriate another eligible body) and a written declaration or ‘certificate’ confirming that the conditions for the relief have been met.
Go to the example eligibility declarations in the supplement to VAT Notice 701/6
Find out more information on what to supply as evidence that you’re an eligible body
Evidence of charitable status
If your charity is registered with the Charity Commission it is entitled to the charity VAT reliefs - assuming the other conditions are met. If your charity is not registered with the Charity Commission, for example if you’re exempt from registration with the Charity Commission or you’re a Scottish or Northern Ireland charity, then you must be formally recognised as a charity by HMRC for tax purposes. In order to claim the VAT reliefs, therefore, you must be able to provide your supplier with either:
- your Charity Commission registered charity number
- evidence that you’ve been formally recognised by HMRC for tax purposes
Find out how to apply for recognition as a charity with HMRC
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
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.
You can find out more in VAT Notice 701/7 Reliefs for disabled people, VAT Notice 701/59 Motor vehicles for disabled people and Notice 701/6 Charity funded equipment.
Go to VAT Notice 701/7 Reliefs for disabled people
Go to VAT Notice 701/59 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
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.
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, or for providing, extending or adapting a washroom or lavatory for disabled people.
Find out more about the VAT relief on construction of facilities for disabled people in Section 6 of VAT Notice 701/7. See link at the end of this section.
The first sale or long lease of a new building for use by your charity for non-business purposes, or as a village hall or similar may be zero-rated.
You can find out more about zero rating of building works and the first sale or long lease of a new building in VAT Notice 708 Buildings and construction.
Go to VAT Notice 708 Buildings and construction
Go to VAT Notice 701/7 Reliefs for disabled people
Installation of energy-saving materials in buildings
The installation of energy-saving materials, such as central heating and insulation in residential accommodation or in a building used solely for a relevant charitable purpose is liable to VAT at the reduced rate. You can find out more in VAT Notice 708/6 Energy-saving materials.
Got to VAT Notice 708/6 Energy-saving materials
Fuel and power
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
Find out more in VAT Notice 701/19 Fuel and power
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
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 be 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 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
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
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
Lifeboats and certain associated goods and services
If your charity provides rescue or assistance at sea, you can purchase the following goods and services at the zero rate of VAT:
- any vessel for use as a 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
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
Contacting the HMRC Charities Helpline
For more help you can contact our Charities Helpline on Tel 0845 302 0203 (open from 8.00 am to 5.00 pm, Monday to Friday). Select option 3 for VAT reliefs.
