When should charities register for VAT?

If your charity makes ‘taxable business supplies’ above the VAT registration threshold you must register for VAT in the same way as any other business.

VAT registration is compulsory and penalties will be charged if your charity doesn’t register for VAT as soon as required.

What counts as taxable business supplies?

Taxable business supplies means turnover resulting from business activities that have a standard, reduced or zero VAT rating. You can check which of your activities count as business activities for VAT purposes by applying the ‘business test’.
For more information about the business test please see paragraph 4.1 of VAT Notice 701/1 Charities.

Some business activities are exempt from VAT altogether so wouldn’t be included when working out whether you need to register for VAT. For more information about exempt supplies please see VAT notice 700/1 – should I be registered for VAT?

Non-business activities

Income from non-business activities includes purely voluntary donations, which are outside the scope of VAT. This is different from business activities that are exempt from VAT.

Voluntary registration for VAT

If your charity makes taxable business supplies, it can choose to register for VAT voluntarily, even if your turnover is below the registration threshold.

However, if your charity makes only non-business or exempt supplies you are not eligible for voluntary registration. For more information please see VAT Notice 700/1- Should I be registered for VAT?