In this section:
- How VAT applies to charities and not-for-profit organisations
- Zero-rated VAT on charity-funded goods or services
- How VAT applies to charity fundraising
- Reduced VAT on gas and electricity used for charity purposes
- How charities can import goods VAT free
Reduced VAT on gas and electricity used for charity purposes
If you are a charity, then for gas and electricity that you use for non-business activities, you can pay a reduced rate of VAT.
If you have premises where you carry out both business and non-business activities, you'll have to provide your supplier with a certificate declaring the percentage of each use.
This guide explains whether or not you might qualify for the reduced rate of VAT, and what you have to put on the certificate it you have to provide one.
On this page:
Who qualifies for the reduced rate?
If you are a charity, then you only have to pay a reduced rate of VAT on fuel and power - such as gas and electricity - that you use in carrying out your non-business activities.
If you carry out a mix of business and non-business activities at one location, then there are rules for apportioning the standard and reduced rates of VAT on the fuel and power you use at those premises.
If you have a location where you only carry out business activities, then you'll have to pay the full standard rate of VAT on fuel and power supplied to those premises.
For us to recognise your charitable status you don't necessarily have to be a registered charity, although clearly if you are, we accept that as sufficient evidence. If you aren't registered with the Charity Commission or the Scottish Charity Regulator, but your charitable status is already recognised by us for taxation purposes, then that's also sufficient evidence for VAT purposes.
Find out what counts as a business activity in our guide to charities and VAT
A mix of business and non-business use
If 60 per cent or more of the fuel or power is supplied to you for use in your non-business activities, then you'll pay the reduced rate of VAT on the whole supply. If less than 60 per cent of the fuel or power is for non-business use, VAT will be charged pro rata - that is, at the reduced rate on that portion which is for qualifying use, and at the standard rate on that portion which is for non-qualifying use.
If you have a mix of business and non-business activities, you will need to provide your supplier with a certificate that declares what percentage of the fuel and power supplied is put to non-business use.
The certificate must show:
- Your fuel or power supplier's name and address.
- Your name, address and - if applicable - VAT registration number.
- The address of the premises.
- The amount of qualifying use expressed as a percentage of the total use. A precise percentage should always be given - do not say 'over 60 per cent' or use any similar form of words.
- A declaration given by a responsible officer or official of your charity as to the truth and accuracy of the facts given. This should include the signature, name, and position of the person giving the declaration, the date on which it is made, and an endorsement that you have read and understood VAT notice 701/19, and that you know you must notify your supplier if there is a change in the qualifying use.
You should retain a copy of the certificate and related calculations, schedules and any other relevant documents.
What supplies attract the reduced rate?
Supplies of fuel and power attract the reduced rate of VAT. These include the following:
- non-hydrocarbon combustible gases such as coal gas, water gases and producer gases
- hydrocarbon gases - ie, gases consisting wholly of carbon and hydrogen, whether liquefied or not - such as methane, natural gas and liquefied petroleum gas (LPG)
- electricity, but not batteries or recharging services or arrangements
- fuel oil, gas oil or kerosene - provided they are not supplied for road use, meet the definition for heavy oil, and are either chargeable with excise duty at a rebated rate or are relieved from excise duty
- wood, peat and charcoal
- firewood
- solid fuels such as coal, coke, briquettes, and smokeless fuels, provided they are held out for sale solely as fuel
Essential related services
In addition, the following supplies can also be charged at the reduced rate, as long as they are supplied - and invoiced - to you by your fuel/power supplier, and they are inseparable from the supply by them of fuel and power:
- disconnection and re-connection of the supply and special meter readings at the instigation of the supplier
- installation, by a supplier of liquefied petroleum gas, of a bulk gas tank regarded as essential to the supply of liquefied petroleum gas
- installation of check meters
- installation or replacement of lines and switchgear belonging to the electricity supplier
- installation tests and re-tests where required by the supplier to protect their equipment
- maximum demand and minimum guarantee charges
- removal of damaged coins from meters
- rental charges for meters, including secondary meters used by landlords to apportion charges between their tenants
- rental of a bulk gas tank in conjunction with the supply of liquid petroleum gas to that tank
- repair, maintenance or replacement of equipment and gas pipes or electric cables - belonging to the supplier - up to and including the consumer's meter
- replacing a credit meter with a pre-payment meter under the supplier's code of practice, or replacing or re-siting by a supplier of their meter at their instigation
- replacement of mains fuses and provisions of earthing terminals
- standing charges
