Goods and services where you have to charge VAT

If you are registered for VAT, you must charge VAT on all VAT taxable supplies of goods and services that you make. 'Supplies' include day-to-day sales as well as anything else that you sell or invoice for, such as assets and commission, and anything else you supply or take out of the business even if you don't charge for it, such as loans, gifts and anything used privately. There are some exceptions.

VAT is payable on the full value of any supplies made, even if no VAT was charged to the person or business who received the goods or services.
If you receive goods or services as full or part payment, you must account for VAT on the full value of the item sold, rather than the amount that you charged the buyer.

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VAT is charged on sales and other supplies

If you are registered for VAT, you must charge VAT on all supplies of goods and services that you make within the UK, at the appropriate rate, unless they are specifically either exempt from VAT or outside the scope of UK VAT.

In addition to charging VAT on the goods and services that you supply to your customers, you must account for and pay VAT on:

  • items sold to staff, such as canteen meals or via vending machines
  • sales of business assets
  • hiring or loaning of goods to someone else
  • commission received from selling something on behalf of someone else
  • certain business gifts
  • goods that you or your staff take out of the business for personal use, whether on a temporary or permanent basis
  • services supplied to the business but then used privately

VAT is also chargeable on:

  • barter
  • part-exchange
  • gifts

Find out what's exempt from VAT or outside the scope, and what rate of VAT you should charge on your sales

Find out more about charging VAT on international sales and movements of goods and services

Find out when you have to account for VAT on private use and self-supply

Find out when you have to account for VAT on samples, exchanges, barters and contras

Find out when you have to account for VAT on payments by instalments, deposits and credit sales

Find out more about the VAT rules for business gifts

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Supplies you don't need to charge VAT on

You do not have to account for, or pay VAT on the following.

Supplies that are exempt from VAT or outside the scope of VAT

Find out more about what's exempt from VAT or outside the scope

Free samples of goods

If you give free samples of your goods to another person or business you don't have to charge VAT as long as you give them for marketing purposes. Your samples must be given to promote sales by demonstrating the product and provided in quantities consistent with that purpose.

So, for example, you would not have to charge VAT on a small glass of wine given to a customer to try in a restaurant, whereas a full bottle would amount to more than marketing - because of the quantity involved - and you would have to charge VAT. You would also have to charge VAT where you provide something from a discontinued range, as there is no product to promote.

Find out more about recent changes in VAT treatment of business samples

Free loans of business assets

If you make free loans of business assets to your customers then you don't have to charge VAT on the loan as long as the cost of hiring the asset is included in the price of something else you sell to your customers. For example, where you sell tea, coffee, water etc and you provide for 'free' a vending machine for these items and none of your customers pays extra for the machine.

Free goods

You do not have to account for VAT on business gifts made to the same person where the total cost of all the gifts does not exceed £50 in any 12-month period.

Find out more about the VAT rules for business gifts

Free services

You don't have to account for VAT on genuinely free services that you provide. You must not receive any payment, goods or services in return.

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Supplies at different rates of VAT

Supplies at different rates of VAT are sometimes called 'mixed supplies'. This is where you charge a single price for a number of separate supplies of goods or services but one or all of them are at different VAT rates.

You need to work out the value of each supply you make at each different VAT rate to see how much VAT you need to charge. If the VAT value is based on the total price that you charge your customer, you need to split that price between each supply - this is called 'apportionment'.

There isn't a special way to do apportionment unless you are using the Tour Operators Margin Scheme where you have to use the method explained in VAT Notice 709/5. Your calculations must be fair and you will need to be able to explain them if HMRC visits or contacts you. There are different ways to do apportionment, and although you can use your own method, there are examples in VAT Notice 700, The VAT Guide.

Read about how to do apportionment in VAT Notice 700 The VAT Guide

Find out about the Tour Operators Margin Scheme in VAT Notice 709/5

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