Trade sectors with special VAT rates, rules or concessions

Different VAT rates apply to different goods and services.

There are also specific VAT rules that apply to certain trades. You need to be aware of these rules if they apply to your business because they affect how you account for VAT, how much VAT you must pay, and how much VAT you can reclaim.

On this page:

Retailers and wholesalers

If you are a retailer, you don't need to issue a separate VAT invoice for transactions under £250 unless the customer wants one. You can also use one of the VAT retail schemes, which allow you to aggregate your sales and account for VAT on the total.

There are specific VAT rules for retailers and wholesalers of certain goods.

Supplies to disabled people

Certain supplies of goods and services to disabled people may be zero-rated.

Electronic goods dealers and wholesalers

A wide range of electronic goods are covered by a range of specific VAT legislation.

Motor traders

There are specific rules for motor traders dealing with:

  • when VAT can be reclaimed
  • what VAT needs to be charged
  • how VAT is calculated on used cars
  • how VAT is calculated on part exchanges
  • private use of cars

Second-hand traders and antique dealers

If you sell second-hand goods or antiques you may be able to take advantage of one of the VAT margin schemes.

Bookshops, newsagents, stationers and music shops

Some printed material such as books, newspapers, music and maps may qualify for zero-rating.

Stamp and coin dealers

There are rules for how much VAT you have to charge on philatelic supplies. Certain investment gold coins are exempt from VAT.

Video and DVD rental

There are VAT implications if you rent out films, or if you accept customers' films in part-exchange when you sell them new films.

Mail order companies and online shops

If you charge customers for delivery it affects the VAT you must charge.

What VAT rate applies to different goods and services

Find out about the VAT retail schemes

Learn more about VAT reliefs for disabled people in VAT Notice 701/7

Read about the VAT reverse charge for mobile phones and computer chips in VAT Notice 735

Find information on joint and several liability for unpaid VAT on electronic goods and software in VAT Notice 726

Find out about the VAT treatment of stamps and philatelic supplies in VAT Notice 701/8

Find out about the VAT treatment of investment gold coins in VAT Notice 701/21A

More about VAT and motor dealers

Find out about the margin schemes for second-hand goods, art and antiques

Get information on VAT and books in VAT Notice 701/10

More about VAT and video rental in VAT Notice 701/14

Find out about VAT and postage or delivery in VAT Notice 700/24

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Manufacturers

Boat manufacturers and boatyards

Boats which are exported from the European Union, or which are sailed away from the EU by a non-UK customer can be zero-rated.

Machine tool manufacturers

You may be able to zero-rate the supply of machine tools used to manufacture goods that will be sent abroad.

Find out about the sailaway boat scheme in VAT Notice 703/2

Find out about tools for the manufacture of goods for export in VAT Notice 701/22

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Farmers, food processors and brewers

Farmers

Farmers may be able to benefit from the Agricultural Flat Rate Scheme. Also, certain animals and animal food may be zero-rated.

Food processors

If you process someone else's food products to produce new goods that are zero-rated for VAT, then your services are zero-rated for VAT too. There is also an agreement with the Agriculture and Horticulture Development Board (AHDB) about the VAT treatment of the levies they collect from slaughterhouses.

Exporters of live animals

There is an agreement with the AHDB about the VAT treatment of the levies they collect from exporters of live animals.

Racehorse owners

There are a number of agreements with the British Horseracing Board and other bodies about VAT registration of racehorse owners and the VAT treatment of various issues regarding racehorses.

Brewers

There is an agreement with the Brewer's Society that affects how VAT in respect of a tenanted estate is reclaimed.

What VAT rate applies to different goods and services

Find out about the Agricultural Flat Rate Scheme in VAT Notice 700/46

Find out about the VAT treatment of animals and animal food in VAT Notice 701/15

Find information on the VAT treatment of food processing services in VAT Notice 701/40

Get information about the Meat and Livestock Commission, the Brewers' Society and the racehorse owners agreements in VAT Notice 700/57

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Transport and freight services

Freight services and forwarding

Freight transported entirely within the UK will usually be standard-rated, but different rules apply to international transport. There are various rules for VAT on the import and export of goods.

Travel companies

You can usually zero-rate domestic passenger transport in any vehicle, ship or aircraft that has at least ten seats. Different rules apply to VAT on international transport.

Taxis, mini-cabs and limousines

There are specific VAT rules if you are an owner-driver, or if you run a taxi or minicab business or taxi association.

Car hire, car rental

There is an agreement in place with the British Vehicle Rental and Leasing Association that deals with how VAT should be calculated on the private use of hire cars.

What VAT rate applies to different goods and services

More about freight transport and associated services in VAT Notice 744B

VAT and international trade

Get information on VAT and passenger transport in VAT Notice 744A

Find out about VAT for taxis and private hire cars in VAT Notice 700/25

Find information on the agreement with the British Vehicle Rental and Leasing Association in VAT Notice 700/57

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Builders, property developers and landlords

Construction of buildings can be zero-rated or standard-rated, depending on the property itself and the circumstances. Sales of land and property may be exempt, zero-rated or standard-rated, depending on the exact circumstances.

Some building work or materials can be zero-rated or reduced-rated. However, there are rules about what VAT property developers can reclaim, and about when they have to account for VAT on building projects.

Normally, property rental is exempt from VAT. However, landlords may be able to waive this exemption and opt to tax a property. Doing so enables the landlord to reclaim VAT on certain expenditure related to that property.

Supplies of water or sewerage services made by a landlord may be either zero-rated or standard-rated, depending on the circumstances. Supplies of fuel and power are normally standard-rated but in some circumstances may qualify for the reduced rate.

More about building trades and VAT

More about VAT on land and property in VAT Notice 742

Find out about VAT on water and sewerage services in VAT Notice 701/16

Find information on VAT on fuel and power in VAT Notice 701/19

Find out about the option to tax in VAT Notice 742A

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Service providers

Barristers and advocates

Special VAT rules apply to barristers and advocates, especially regarding the input tax charged on shared premises, office equipment and services when barristers or advocates share chambers.

Employment bureaus, employment agencies, staff agencies, etc

If you supply staff, then whether or not the staff are under your direction or control can make a difference to the VAT treatment of the supply.

Insurance brokers and agents

Insurance transactions are exempt from VAT, but some premiums may be liable to Insurance Premium Tax.

Find out about the VAT rules for barristers and advocates in VAT Notice 700/44

More about the VAT treatment of supplies of staff in VAT Notice 700/34

Get information on insurance and VAT in VAT Notice 701/36

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Sports, leisure and entertainment

Clubs and associations

Clubs and associations need to know the rules that apply to VAT on membership subscriptions, prize and appearance money, and other aspects of their business.

Some supplies made by youth clubs and some supplies relating to certain sports may be exempt from VAT.

There are specific rules about how you account for the VAT on supplies relating to coin-operated gaming and amusement machines.

The charges relating to bingo games and participation in lotteries are exempt from VAT.

Hotels, guest houses, campsites and caravan sites

Sleeping accommodation may be exempt from VAT if a guest stays for over 28 consecutive days.

There are specific rules about VAT on the provision of services to caravans and houseboats.

If you buy in and resell travel facilities you may have to use the Tour Operator's Margin Scheme.

Restaurants, cafes and takeaways

Supplies of food and drink in the course of catering, including supplies of hot takeaway food are standard-rated.Supplies of cold food and drink for takeaway may be zero-rated providing that the product is not standard-rated in its' own right.

Theatres, museums, galleries, and zoos

Admission to certain cultural events is exempt from VAT.

Travel agents and tour operators

A travel agent can have three different kinds of relationship with their customers, and this affects how they account for VAT.

What VAT rate applies to different goods and services

More about VAT for clubs and associations in VAT Notice 701/5

Find out about VAT for youth clubs in VAT Notice 701/35

More about VAT and sport in VAT Notice 701/45

Find information on gaming and amusement machines in VAT Notice 701/13

More about VAT and bingo in VAT Notice 701/27

Find out about VAT and lotteries in VAT Notice 701/28

Find out about VAT on hotels and holiday accommodation in VAT Notice 709/3

Get information on caravans and houseboats in VAT Notice 701/20

Find information about VAT on catering and take-away food in VAT Notice 709/1

Get information on theatres, museums, galleries and zoos and the exemption for culture in VAT Notice 701/47

Find out about the Tour Operator's Margin Scheme in VAT Notice 709/5

More about VAT for travel agents in VAT Notice 709/6

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Health, education and welfare

Charities and charitable institutions

Charities may need to register for VAT, but may benefit from special VAT treatment.

Health professionals and health institutions

Some of the services provided by health professionals and qualifying health institutions may be exempt from VAT.

Certain health bodies, research institutions or charitable institutions may be able to purchase, or receive donations of, equipment for medical or veterinary uses without paying VAT.

Schools and other education providers

Most services provided by schools and other educational establishments are exempt from VAT, but there are exceptions.

Welfare providers

Welfare services and connected goods provided by charities, welfare agencies or institutions, or public bodies, may be exempt from VAT.

Funeral directors and undertakers

Some of the services associated with funerals, burials and cremations may be exempt from VAT.

What VAT rate applies to different goods and services

Find out how VAT applies to charities

Find out about VAT and health professionals in VAT Notice 701/57

Get information on VAT and health institutions in VAT Notice 701/31

Get information on charity funded equipment for medical or veterinary use in VAT Notice 701/6

Find out about VAT on education and vocational training in VAT Notice 701/30

Find out about VAT and welfare services in VAT Notice 701/2

Get information on VAT and burials and cremations in VAT Notice 701/32

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