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
Charging VAT if you make supplies to charities
As a business supplier, you can sell certain goods and services to charities at the zero rate or reduced rate of VAT (5 per cent). You may also be able to supply certain other goods and services to certain other eligible bodies at the zero rate of VAT when they are purchased with charitable funds.
However, before you can do so, your customer must provide you with evidence of their eligibility and other information to show that the sale meets certain conditions - so that it qualifies for the relief. This is known as an eligibility declaration.
It’s your responsibility to take reasonable steps to check the information provided and be satisfied that the organisation you’re supplying is entitled to VAT relief. It’s also your responsibility to apply the right VAT rate.
Note that Community Amateur Sports Clubs (CASCs) don’t qualify for the VAT reliefs for charities.
On this page:
- Supplies to charities that qualify for a zero rate of VAT
- Supplies of charity-funded equipment that qualify for a zero rate of VAT
- Supplies that qualify for reduced rate of VAT
- Checking that your customer is eligible for VAT relief
- Applying the correct rate of VAT
- Contacting the HMRC Charities Helpline
- More useful links
Supplies to charities that qualify for a zero rate of VAT
If a charity supplies you with a satisfactory eligibility declaration (see the section ‘Checking that your customer is eligible for VAT relief’) they can buy certain goods and services without paying VAT.
The goods and services that may qualify for zero rating include:
- advertising and goods associated with collection donations
- aids for disabled people
- certain vehicles
- certain construction services
- drugs and chemicals
- equipment for producing talking books and newspapers
- lifeboats and certain associated goods and services
- charity funded equipment for medical and veterinary uses
- medicinal products
- ambulances
- certain rescue equipment
- resuscitation training models
Find out more about purchases that charities can claim VAT relief on
Supplies of charity-funded equipment that qualify for a zero rate of VAT
Certain goods and services can be zero-rated when purchased by certain types of charities and other eligible bodies with charitable or donated funds, or purchased by others specifically for donation to eligible bodies.
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 providing rescue services
- charities providing certain transport services, or rescue/first aid services for humans or animals
The supplies that can qualify for relief include:
- medical, veterinary and scientific equipment for use in medical or veterinary research training, diagnosis or treatment
- ambulances
- certain goods for disabled people
- certain motor vehicles
- certain rescue equipment
- certain resuscitation training dummies
Find out more about the reliefs on charity-funded medical, veterinary and other equipment
Supplies that qualify for reduced rate of VAT
Fuel and power for charity non-business use
Charities can get a reduced rate of VAT on fuel and power supplied to them for non-business use, as well as certain related services such as maintenance and repairs.
If the charity carries out business and non-business activities
If the charity has a mix of business and non-business activities, they must provide you with a certificate that declares what percentage of the fuel and power supplied is put to non-business use.
The certificate must show:
- your (the supplier's) name and address
- the name, address and - if applicable - VAT registration number of the charity
- the address of the premises being supplied - if different to the above
- the amount of non-business use expressed as a precise percentage of the total use
If 60 per cent or more of the fuel or power is for non-business activities, they will qualify for reduced rate VAT on the whole supply. If less than 60 per cent of the fuel or power is for non-business use, you should charge reduced rate VAT on the portion which is for non-business use, and standard rate VAT on the portion which is for business use.
The charity must notify you if the calculation changes so that you can adjust the VAT charged if necessary.
Find out more about how charities can qualify for reduced VAT on fuel and power
Installation of energy-saving materials in buildings
The installation of certain energy-saving materials, such as central heating controls and insulation in residential accommodation or in a building used solely for a relevant charitable purpose can be supplied at the reduced rate of VAT. You can find out more in VAT Notice 708/6 Energy-saving materials.
Go to VAT Notice 708/6 Energy-saving materials
Checking that your customer is eligible for VAT relief
If a charity is registered with the Charity Commission it is entitled to the charity VAT reliefs - assuming the other conditions are met. If a charity is not registered with the Charity Commission, for example if it's exempt from registration with the Charity Commission or if it's a Scottish or Northern Ireland charity, then it must be formally recognised as a charity by HMRC for tax purposes in order to claim the VAT reliefs.
Your customer must therefore be able to provide you with either:
- its Charity Commission registered charity number
- evidence that it's recognised by HMRC for tax purposes
Check whether a charity is registered with the Charity Commission (Opens new window)
Eligibility declarations
Eligibility declarations or certificates confirm that the conditions for the relief have been met.
HM Revenue & Customs (HMRC) recommends that you get a written declaration or certificate of eligibility from each customer who claims entitlement to VAT relief.
Note that for the VAT reliefs on the construction, sale or long lease of a new building, a certificate is a legal requirement. See section 16 of VAT Notice 708 Buildings and construction - link at the end of the section.
A declaration should:
- contain sufficient information to show that the conditions for the relief are met
- be separate, or clearly distinguishable from any order form or invoice against which the goods or services are supplied - a customer signing an order should not automatically be signing a declaration of eligibility for VAT relief
It’s important that you carefully check the declarations you receive and take reasonable steps to satisfy yourself that the conditions of the relief are met. You must keep the completed declarations, and any additional checks carried out, with your records.
Go to the example eligibility declarations in the supplement to VAT Notice 701/6
Go to VAT Notice 708 Buildings and construction
Applying the correct rate of VAT
You - the supplier - are responsible for ensuring that all the conditions for zero or reduced rates of VAT are met.
The production of a declaration or any other evidence of eligibility by your customer does not authorise the zero rating or reduced rating of a supply. You must take reasonable steps to confirm that any information given by the customer is correct and check any apparent inconsistencies.
However, your customer has a responsibility to make a truthful statement of their eligibility for VAT relief and, where required, must provide appropriate documentation to support any statements they provide.
What happens if you charge the wrong amount?
HMRC will not seek to recover tax due from a supplier who has taken reasonable steps to check the validity of a declaration, but has failed to identify an inaccuracy, and, in good faith, has zero-rated or reduced-rated a supply.
This concession will only be applied if you can demonstrate that all reasonable steps were taken to check the details provided on the declaration.
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.
More useful links
Find out more about VAT reliefs for charities in VAT Notice 701/1
