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UK VAT Compliance Guide - How VAT applies in the UK to different goods and services, VAT rates, VAT registration requirements, VAT returns and the recovery of VAT on costs etc. Autumn Budget Read More VAT Risk & Control Framework Read More UK Carbon Border Adjustment Mechanism (CBAM) - 2027 Read More Oil and Gas - Place of Supply for VAT Read More Banking - How VAT is Applied to Services and Recovered on Costs Read More Fuel & Power - How VAT Applies Read More UK VAT is primarily governed by Law ( VAT Act 1994) and is enhanced by case law and administered by the UK Tax Authority known as HMRC (Her Majesty's Revenue & Customs). VAT (Value Added Tax), is a consumption tax levied on goods and services at each stage of the supply chain, with the final cost being borne by the end consumer. VAT Registered Businesses will collect VAT (output) from customers and pay this to HMRC usually on a monthly or quarterly basis. VAT Registered Businesses can also fully recover the VAT they pay on their own purchases subject to any partial exemption restrictions . On this page you will find detailed VAT guides, articles and links to help you better understand the key issues around VAT and other indirect taxes and help your business stay VAT compliant. Please try our AI VAT Advisor which will provide guidance and key VAT information along with detailed summaries from the content of this site relating to VAT queries you may have. UK VAT Registration Businesses in the UK (including Isle of Man) are required to register for VAT If the value of their Taxable Turnover (standard rate, reduced rate and or zero rated supplies) in the preceding 12 months or less goes over the registration threshold of £90,000 If the value of their taxable turnover (standard rate, reduced rate and or zero rated supplies) is likely to exceed £90,000 in the next 30 days if the business is based outside the UK and supplies goods or services in the UK or are expected to in the next 30 days. (Threshold does not apply here) If a businesses is being taking over a VAT registered business as a going concern If you make distant sales into Northern Ireland and exceed the annual threshold. Note: Businesses include Sole Traders, Partnerships, Limited Companies, Clubs, Associations. What is Taxable Turnover Standard Rated Sales of goods and services Zero Rated Goods and Services Reverse Charge Output VAT Any Goods or Services you barter or part exchange The value of any goods you have used for private use Property services supplied (rent and service charges) where you have opted to tax the building. What is not Taxable Turnover Sales of capital items such as buildings , machinery, cars Exempt supplies Voluntary Registration You can apply to HMRC for voluntarily registration if: you are making taxable supplies where their value is under the £85,000 threshold. This will allow you to recover VAT expenses incurred. You are intending to make taxable supplies in the near future Register - online here UK VAT Explained VAT (Value Added Tax) is a tax on consumption and is added to the sale of goods and services supplied by VAT Registered businesses. Not all products and services sold attract VAT and there are a number of VAT rates or categories as follows: Standard Rated 20% (taxable) Reduced Rate 5% (taxable) Zero Rated (taxable) Exempt Outside The Scope Depending on the goods being sold or services being provided, one of the categories above will be applied to the sale. Standard Rated Goods and Services Standard Rated goods and services are goods sold or supplied by VAT registered businesses and include 20% VAT. Therefore invoices to customers will include 20 % VAT. Standard Rated services fall into the taxable services bucket and where businesses make taxable sales and exceed or are likely to exceed £90,000, they are required by law to Register for VAT. Examples of Standard Rated goods and services include: Fuel Professional Services such as Legal and Accountancy Computers and Mobile phones Hotel Accommodation No Domestic Energy Alcohol Restaurant food and hot takeaways Reduced Rate Goods and Services Reduced rate VAT of 5% is mainly applied within the domestic fuel and construction industry. Examples of Reduced Rate VAT at 5% include: Domestic / residential energy bills (Gas & Electric) Gas fired boiler installation Radiator Connection or re-connection to the gas mains Renovating a dwelling that has been empty for at least 2 years Zero Rated Goods and Services Goods and services supplied as Zero Rated VAT are taxable supplies but without VAT applied. Therefore invoices generated and sent to customers for zero rated supplies will not include VAT. Examples of Zero Rated goods and services include: Children's clothing Books Sewerage services supplied to domestic or industrial customers Water supplied to domestic households Insulation Take away - cold food Note: where businesses make sales of goods and services to non UK business customers, these can also be treated as Zero Rated in some instances as they are deemed outside the scope of UK VAT but are classed as taxable services which carry the right to deduct Input VAT. (Please see place of supply button) Exempt Goods and Services Exempt supplies of Goods and Services unlike standard rated and zero rated are not taxable supplies. Exempt supplies are listed in the VAT Act 1994 Sch 9 and include the following: Postal Services Insurance Land and Property Rental Education Financial Services Tax Point Rules Tax points are the specific points in time when sales of goods or services take place and are governed by rules set out by HMRC. VAT registered businesses must account for VAT within the period the tax points for their sales occur. So if a tax point occurs in March and the businesses next VAT return period is January to March then the VAT on the sale will have to be included within the quarter ending March VAT return. Basic Tax Point Goods - The date when you send them to your customer or the customer takes them away or for goods assembled at a suppliers premises, when the goods are made available to the customer Services - The date when the service is performed — it’s normally taken as the date when all the work except invoicing is completed Actual Tax Point The basic tax point will be overridden if an actual tax point is created. An actual tax point is created when: An invoice is issued or payment is received (whichever is first) before the basic tax point. An invoice is issued up to 14 days after the basic tax point You do not have to follow the 14 day rule, but if you decide not to you must tell HMRC by writing to the VAT Written Enquiries Team . If you wish to have an extension of the 14 day rule, then you must apply to HMRC by writing to the VAT Written Enquiries Team , giving your reasons. Note: Failure to tell HMRC about extending the 14 day rule will result in the tax point reverting to the basic tax point. Continuous Supplies of Services If you supply services on a continuous basis and receive payments regularly or from time to time, there’s a tax point every time you issue a VAT invoice, or receive a payment, whichever happens first. If payments are due to be made at regular intervals (for example, by banker’s order or direct debit), you can issue a VAT invoice at the start of any period of up to one year (provided that more than one payment is due in the period) to cover all the payments due in that period. For each payment you should set out the: VAT-exclusive amount Date on which the payment is due Rate of VAT VAT payable If you decide to do this, you do not have to account for tax on any payment until the date on which it is due, or date you receive it, whichever happens first. Your customer must not reclaim, as input tax, any VAT shown on the VAT invoice until the date on which the payment is due, or you have received the payment, whichever happens first. The same procedures apply to continuous supplies of goods, in the form of water, gas and electricity. Goods supplied on sale or return, approval or similar terms When you supply goods on sale or return, for example, they have not been sold and you still own them until such time as they’re adopted by your customer. Adoption means that the customer indicates a wish to keep them. Until your customer does so, your customer has an unqualified right to return them at any time, unless you have agreed a time limit. You may have fixed a time limit of adoption of less than 12 months from the date when the goods were sent. If a time limit has: Been fixed for a period of 12 months or less, then the Basic Tax Point is the date the time limit expires Not been fixed or fixed for a period of more than 12 months, then the Basic Tax Point is 12 months from the date when the goods were sent Note: In either case if your customer adopts the goods before the time limit expires the date of adoption becomes the basic tax point. Also the basis tax point as mentioned above will be overridden by the actual tax point on the date an invoice issued by the business providing the goods or the date payment is received for the goods, which ever is earlier. If you receive a payment which is not returnable, this will normally indicate that the goods have been adopted. The payment of a deposit required as a condition of delivery — which is repayable if the goods are returned — does not constitute adoption. Finally, It is a businesses responsibility to make sure that its customers notify them promptly when they have adopted goods. Goods taken for personal or other non-business use Goods that are taken out of a business: Permanently for non-business use will have a basic tax point on the date when the goods are taken or set aside for this purpose Temporarily for non-business use, but they’re still part of its stock or business assets, then a tax point is triggered each time they’re used or — if the non-business use continues over a period of time — on the last day of each tax period that the goods are used or made available for that purpose VAT Returns VAT Registered businesses that make supplies of goods and services are required to file their VAT returns to HMRC either monthly or quarterly (depending on VAT scheme) to pay over the Output VAT collected on sales to their customers and also to recover any Input VAT they have incurred on supplies they have purchased for operating their business. The difference between the Output VAT collected and the Input VAT incurred will form the basis as to whether VAT is payable or recoverable from HMRC. VAT collected on Sales greater than VAT incurred on purchases = Payment due to HMRC VAT incurred on purchases greater than VAT collected from customers = Recovery of VAT from HMRC Any exempt and zero rated supplies a firm makes to its customers or purchases from its suppliers also need to be included on the VAT Returns in boxes 6 and 7 respectively. Partial Exemption - VAT Recovery In addition to Output VAT that is collected by a business on its sales and then paid over to HMRC, businesses can also recover VAT on expenses they incur. The recovery of VAT depends highly on the nature of the supplies being made by the business. Business is only making Taxable Supplies (Standard rated, reduced rate or zero rated) - then the Input VAT incurred on its purchases is directly attributable to its taxable sales and can be fully recovered from HMRC. Business only makes Exempt Supplies - Then it cannot recover any of the input VAT incurred on purchases as the input VAT is directly attributable to supplies of exempt goods or services. Businesses making a mixture of Taxable and Exempt Supplies - This type of business is known as a partially exempt business and because not all of its supplies are taxable, it can only recover a calculated percentage of the input VAT it has incurred. Partially Exempt Businesses - will be required to calculate their partial exemption recovery percentage or rate and then apply this rate to their pool of input VAT that they have incurred. The standard method for calculating the partial exemption recovery rate is as follows: Taxable Sales (Standard, Zero, Reduced Rate) / Total Sales (Standard, Zero, Reduced Rate, Exempt) = VAT Recovery Rate Percentage % Example - Standard Rated Sales £1,000, Zero Rated Sales £500, Reduced Rated Sales £200 and Exempt Sales £2,000 £1,000 + £500 + £200 / £3,700 = 46 % RR If the input VAT pool is £20,000, then the business can recover £9,189 from HMRC via its VAT return. Note: Many larger and more complex businesses (such as banks) will have Partial Exemption Special Methods which will have been formulated specifically for their business and agreed with HMRC. Many businesses will have multiple internal business areas and products and as such using the standard method may not be suitable. Once formulated businesses will be required to adhere to their agreed Partial Exemption Special Methods and keep HMRC up to date on any internal business restructures that might affect the agreed method. HMRC - has the right to issue a Special Method Override where they believe the existing method in use does not produce a fair and reasonable level of VAT recovery. Annual Input VAT Adjustments As part of the VAT return process partially exempt businesses are required to complete annual Input VAT adjustments to ensure the correct amount of VAT has been recovered from HMRC for the overall year. Normally businesses will file quarterly VAT returns which include VAT recoverable for the quarter. The recovery of VAT on the quarterly returns will be based on the input VAT allocated between Taxable and Exempt sales for the quarter or based on the previous years VAT recovery rates which are being provisionally used for the current year until the annual adjustment is completed. So VAT returns completed during the year are actually provisional in terms of the recovery of VAT. As such at the end of the year input VAT recovery will need to be revisited to: Review how input VAT has been used in the business to see if there has been any change in use. (Taxable / Exempt) Recalculate VAT Recovery Rates based on the current years sales data Review input VAT allocations to different areas of the business Once the above process has been completed, the recalculated input VAT recovery for the whole year will then be compared with the input VAT reclaimed on the quarterly returns. Any under or over recovery of VAT will then be refunded or repaid to HMRC normally via the first VAT return of the following year. From a business perspective, it maybe important to carry out mid year reviews of the VAT recovery by looking at aspects such as actual VAT incurred and Actual VAT recovery rates so as to not have large swings in irrecoverable VAT which can affect P&L where the input VAT throughput is significant. (Most relevant to partially exempt businesses where VAT recovery is high). Reverse Charges Where firms purchase services from non UK suppliers that would normally have VAT applied in the UK, they will have to self account for reverse charge VAT in the UK. The purpose of this measure is to ensure UK companies have a level playing field competitively and as such ensure companies do not make their purchases abroad just to avoid paying 20% VAT. The following purchases would attract Reverse Charge VAT Legal and Accountancy services Software Advertising Consultancy For example if a UK company purchased legal services from a company in France for £1,000 then the UK company would have to include £200 on its UK VAT return as output VAT and will equally it will able to include £200 as recoverable input VAT. Note: as mentioned under partial exemption above, the level of input VAT recoverable by a business will depend on the type of sales it makes. If a firm only makes taxable (standard and zero rated supplies), then it will be able to recover the full £200 reverse charge VAT which is payable to HMRC. In this case, as the reverse charge VAT payable is equal to the reverse charge VAT recoverable and as such there is nothing to pay HMRC. If the firm also made exempt supplies to it's customers and the French legal fee charge was not related to a specific taxable supply being made by the UK company, then it would only be able to recover a portion of the £200 reverse charge VAT based on its Partial Exemption Recovery rate. On its VAT return the business would enter £200 in box 1 (Output VAT) and £200 in box 4 (input VAT recoverable) and thus box 5 ( VAT payable of recoverable from HMRC ) would be nil. The net values of the services would go in box 6 (net outputs) and (net inputs) respectively. For more information on reverse charges, please click on reverse charge button on the home page. Pre VAT Registration Expenses Where a business buys goods or services before it registers for VAT, to support taxable business activities when it is registered, it can recover the tax provided that: in the case of goods (either stock for resale or fixed assets), the goods remain on hand at the date of registration and will be used in the newly registered business. These goods must have been bought within the time limits that are set out in regulation 111; for businesses with a registration date after 1 April 2010 the time limit will be 4 years in the case of services the supply was made not more than six months before the date of registration. Six months represents a period in which it is deemed that services obtained will relate to business activity carried on at the time of registration. Tax incurred on goods on hand at registration (other than capital items - see below) cannot be deducted if the VAT was incurred outside of the time limits set out in regulation 111. This includes VAT incurred on services performed on those goods. If a business is given a backdated registration date this becomes the relevant date for working out the extent of the time limits. Businesses are not required to reduce the VAT deducted in respect of pre-registration use of fixed assets. For example, VAT incurred on a van purchased three years before registration and used before and after registration would be recoverable in full, subject to the normal rules on VAT deduction. You can only reclaim VAT on purchases for the business now registered for VAT. They must relate to your ‘business purpose’. This means they must relate to VAT taxable goods or services that you supply. Please see below HMRC link for more information. VIT32000 - How to treat input tax: pre-registration, pre-incorporation and post-deregistration claims to input tax under regulation 111 - HMRC internal manual - GOV.UK (www.gov.uk) Required VAT Records and Accounts All taxable persons must keep and preserve certain records and accounts. This VAT record-keeping requirements that anyone who is registered for VAT must comply with includes: The VAT account What records must be kept Maintaining and preserving records For more information see Record keeping (VAT Notice 700/21) . -Contains public sector information licensed under the Open Government Licence v3.0. E - Invoicing in UK from 1 April 2029 Read More VAT Explained VAT Registration Making Tax Digital Place of Supply Business Expenses VAT Invoicing VAT Accounting P&L - BS & VAT VAT - Risk Correcting VAT Errors Disbursements VAT Exemptions Importing & Exporting Reverse Charges Salary Sacrifice & VAT VAT - Employee Expenses Bad Debt Relief Motor Vehicles & VAT Self Billing Agreements VAT Automation Selling a Business Debt - (Sale of Debt) Pension Schemes Opting to Tax Property Barter & Part Exchange Capital Goods Scheme Agents and VAT Catering - Food & Drink Delivery of Goods Margin Schemes Intercompany Recharges Risk & Control Framework Business Risk Reviews Banks & VAT Barristers & VAT Charities & VAT Commodities & VAT Construction (CIS) & VAT Crypto Currencies Digital Services Global VAT Rates Energy & VAT Financial Services & VAT Insurance & VAT Intermediaries & VAT Limited Partnerships Online Market Places Supply of Staff & VAT Taxi Services & VAT VAT Number Checker VAT Groups Good & Services VAT VAT Schemes E Invoicing UK VAT IOSS Scheme Senior Accounting Officer VAT Risks - Where? Read More Business Expenses & VAT Read More Listed Places of Worship Grant Scheme - £25,000 Cap on VAT Recovery Read More UK Financial Services - VAT Explained. Explore Financial Services Product List and VAT Liability Explore Are you Self Employed or a Landlord? Making Tax Digital Applies from 6 April 2026 Explore Explore HMRC - (P2P) Procure to Pay (Accounts Payable) Risk Mitigation HMRC's Transformational Roadmap Enhanced Learning and AI Tools No MTD for Corporation Tax E Invoicing Rollout Phase out of Govt Gateway Stricter Rules for Umbrella Companies Read More HMRC - Climate Change Levy (CCL) Consultation - electrolytic hydrogen production, Read More Reverse Charges - How VAT Applies Read More The Sale of Debt & VAT Read More UK VAT Guide - UK VAT Compliance Guide for Busineses Select Topic

VAT DIGITAL.COM - UK & Global VAT News & Compliance for Europe, the Americas, Africa & Asia, Online AI VAT Advisor,E Invoicing, HMRC & Case Law updates, MTD, etc Making VAT Simple Making VAT Simple Vat Digital.Com Vat Digital.Com VAT DIGITAL.COM - UK & Global VAT News & Compliance UK & Global VAT News US Sales Tax News UK VAT Guides UK Tax News & Updates Country VAT Rates Country VAT Guides HMRC Updates Global E Invoicing News and Updates VAT Automation Guide VAT for Small Business VAT for Banking & Financial Services VAT for the Construction Industry VAT for the Energy Industry VAT AI Advisor - Online 24/7 VAT Accounting & VAT Recovery VAT Returns & E Filer Links VAT Risks & Controls VAT DIGITAL. COM - Making VAT Simple VAT Digital AI - Advisor - Online 24/7 Demystifying VAT - Online 24/7 VATDIGITAL.COM - VAT Digital.Com making vat simple Intercompany Recharges and VAT - VAT Rules & Risks Read More VAT Digital.Com making vat simple Financial Services VAT Banking - VAT What is VAT & When to Register Global VAT Guides UK VAT Guide VAT News UK Tax Rates Check a VAT Number is Valid Global VAT Rates VAT on Business Expenses Europe VAT Guide UK - VAT Invoicing Rules Finance - VAT Liability Table E - Invoicing Updates Mergers & Acquisitions VAT Construction - VAT P/L & VAT VAT Risk VAT Accounting Reverse Charges VAT Rates - Goods & Services Importing & Exporting VAT Groups Intercompany Recharges & VAT Selling a Business & VAT VAT Risk & Control Framework VAT Compliance Automation VAT & Food Banking And VAT Investment Banking Corporate Banking Retail Banking Private Banking Read More Partial Exemption Special Methods (PESM) VAT Allocation & Recovery MTD & VAT E2E Automation Interco Recharges & Reverse Charges Banking income - VAT Liability International Trade Fixed Establishment & VAT Grouping Risk Management & Controls E Invoicing

Comprehensive guide on how to prepare for Interviews for VAT roles, key areas of knowledge required, experience requirements and much more. Key VAT Terminology "Take the heavy lifting out of your role search!" Interview Process The Job Market for VAT Roles has been busy and robust over the past few years and one of the key changes in the interview process has been how interviews are conducted. As a result of the move to more flexible working (home working) following the pandemic, many first, second and even some final interviews can be held over Teams, Zoom and other conferencing platforms. Whilst this may save time travelling to prospective employers, it will mean adapting to online face to face interviews rather than meeting face to face in person. Some candidates will prefer this others will not. Interviews Always research the target company extensively as this will convey dilig ence and a keen interest in the role. Focus your interview preparation on the requirements of the role by being ready to articulate how your experience and skills are a great fit for the role. Revisit and revise your UK and EU VAT Technical knowledge. See the key VAT Terms button for more guidance on areas in VAT that you should be familiar with. Be prepared to answer technical questions on real or hypothetical VAT advisory and compliance scenarios. Be up to date with current industry issues and case law. Look as professional as you would going for a role at the prospective Employers offices. Test your audio is clear and camera is working properly prior to the interview. Bad audio can impact the interviewers perception. Always be on time as keeping your interviewer waiting does not give a good impression. Walk through your CV many times prior to the interview as this will ensure you can do this clearly and confidently when asked to do so during the interview. Listing your strengths during an interview is sometimes not enough and as such you need to be prepared to demonstrate how these strengths were exhibited while working day to day and on projects. Be prepared to respond to questions like "why do you feel you are the right candidate for the role", "What skills and efficiencies would you bring to this role", What are the 3 or 4 key things you would do if you got the role", " How do you deal with conflict and difficult situations", " Why are you leaving your current role" Giving realistic answers for weaknesses and what you have done or intend to do to improve will impress potential employers. Collaboration is a key skill in the modern digital age not only for BAU but for projects so ensure you emphasise and demonstrate how well you can do this. Digital Skills have become an increasing focus over the past couple of years so it will help if you are up to date on the latest developments such as blockchain, Crypto, NFT's etc and also how VAT is currently applied or will be applied to these assets in the future. Always smile and be ready for the usual introductory conversation as this will help the interviewer and yourself settle into the more formal interview. Also first impressions as we know can have a impact on whether you move to the next round. Always prepare a list of questions to ask that will help you understand the department, team structure, why the role is vacant, current issues, ongoing projects, to find out more about your potential line manager, flexible working policy etc. Be prepared for the good cop and bad cop interview where one of the interviewers seems calm and warm and the other more stern and interrogating. The purpose of these interviews can be to see how well you handle pressure or can just be innocent in that this is the natural personality style of the interviewers. At the end of the interview it's always good and polite to ask what the next steps are especially if you have not been told. This will help you manage expectations re timelines for the interview process etc. Finally be enthusiastic, confident, articulate, warm, and smile. Never take job rejections personally. Every adversity leads to an equal or greater benefit so be patient, chin up and move on to the next opportunity! VAT DIGITAL. COM London

Global VAT News - Get a round up of the latest UK, EU and Global VAT news including HMRC and Tax Authority updates, UK Tax Tribunal, Supreme Court & CJEU case updates. Global VAT News - VAT News, stay up to date with the latest UK, EU, Asia, Africa and Americas VAT News and articles. Outlined in the VAT news galleries below are summaries of the latest VAT news items and Tribunal / Court cases in relation to VAT and there is a separate section for global news items, updates and court cases relating to VAT with relevant links provided. The world of VAT and GST is rapidly changing, driven by the increased focus on digitalisation, e-invoicing, and tax authority focus on the tax gap and harmonisation. The EU's VAT in The Digital Age package (VIDA) reforms will become mandatory from 1 July 2028 with e invoicing for B2B inter EU transactions becoming mandatory from 1 July 2030. The UK Chancellor announced as part of the 2025 Autumn budget that e invoicing will be mandatory in the UK for B2B and B2G VAT invoicing from 1 April 2029. E invoicing in particular has been mandatory for years in many South American nations such as Chile, Argentina, Brazil, Columbia and in some European countries such as Italy. European countries such as Germany, Romania, Poland have adopted mandatory e invoicing more recently. In Africa, Kenya, Nigeria, Egypt, Uganda and Tunisia have all adopted and implemented mandatory e invoicing. Latest VAT News VAT News - June 2026 - HMRC Update on VAT Recovery for funded Occupational Pension Schemes HMRC have updated their guidance on the recovery of input VAT incurred directly by the employer in relation to its funded occupational pension scheme as follows: Input tax incurred by an employer on services provided in relation to its funded occupational pension scheme will be the employer’s input tax. This input tax is considered an overhead, as it is directly linked to the employer’s business as a whole. It is therefore recoverable in full, subject to any partial exemption restrictions. This treatment is the same whether the costs incurred relate to administration or management of the scheme’s investments. If the employer contracts directly with a provider of fund management services, then it can deduct the input tax incurred, with the normal evidential requirements, such as an invoice in its name (an invoice ‘care of’ will be acceptable for this requirement, and alternative evidence may be considered in line with guidance at VIT31200). Invoices correctly made out to a Trustee, and not the Employer may not be re-issued to the sponsoring employer, in line with normal VAT invoicing rules. Any input tax on them is the Trustees to be deducted in line with their Partial Exemption recovery position. If the contract for management services is between the fund manager and the trustees, then for the employer to deduct, the trustees should make a taxable charge to the employer for their services of running the scheme on the employer’s behalf. The employer will then be able to deduct input tax on this charge. As per normal VAT rules, issuing an invoice which is not paid does not give a right to recovery. A payment must be made; an agreement to make contributions does not provide proof of payment of VAT invoices. There are two routes for an employer to evidence that they paid the costs of running a scheme: Invoices from the fund managers issued to the employer directly which they paid or deducted from the pension pot; either is acceptable as long as the employer holds an invoice and can evidence the payment; or The Trustees of the scheme incurred all of the costs (unable to recover because they did not incur costs for their taxable business activity) and raise a taxable charge for managing the scheme to the employer, so that they hold a valid invoice. Source - HMRC Input VAT manual VIT44650 - Link - VIT44650 - Specific issues: Attribution of VAT on services .. . VAT News - May 2026 - Temporary Introduction of Reduce Rate VAT of 5% The Government has announced the introduction of a temporary reduced rate of VAT (5%) for supplies of children’s meals and tickets to certain attractions, intended to reduce the cost of selected activities and services for families with children during the summer holiday period. The reduced rate will apply from 25 June 2026 to 1 September 2026 (inclusive). The reduced rate for children’s meals and children’s tickets for cinemas, theatres, exhibitions and shows covers those supplies that are marketed, priced and presented as intended for children. These do not generally apply to supplies aimed at adult customers, except where those supplies form part of a qualifying family package as described in this brief. The reduced rate will apply to tickets for all customers for attractions set out within this brief. This cut in VAT rate from the standard rate of 20% will be introduced by statutory instrument and have effect on admissions from 25 June 2026 to 1 September 2026 and will apply to the following supplies (where conditions are met): Children’s meals Children’s cinema, theatre, show and concert tickets Admission to certain attractions Read More: Temporary reduced rate of VAT for children's meals, tickets ... VAT News - June 2026 - HMRC VS Bolt Services UK Limited The UK Court of Appeal passed judgment in favour of HMRC in its appeal against the earlier UTT ruling that Bolt Services UK Limited was able to use the "Tour Operators Margin Scheme" to only account for VAT on the margin on customer journeys via its App as it was intended for the travel agent industry. See attached Court of Appeal Ruling below: HMRC -v- Bolt Services UK Limited UK VAT News - Latest UK VAT News headlines 8 June 2026 - Barclays Services Corp vs HMRC - UTT upholds HMRC's refusal admit BSC to the BBPLC VAT Group. Fixed Establishment Case April 2026 - Domestic Reverse charge does not apply to the supply of electricity at a charging point for electric vehicles. This is because either the vehicle user is not VAT registered, or because it is not a wholesale supply. This applies whether or not the electricity is supplied at a public charging point. Paragraph 3.2 describes wholesale as having an ordinary meaning where the supply is business to business and there is little or no consumption of the supply. Electric vehicle charging does not fall within this definition. HMRC to Appeal FTT Decision - Feb 2026 Ruling that 5% VAT should apply to EV charging in Public Places where consumption is below 1000 kwh / month for a customer. May 2026 - Colchester Institute vs HMRC - Court of Appeal - Grant Funding from Gov't agencies such as SFA/ EFA for building works was consideration for educational services and thus Vatable as there was a direct link between grant funding and the supply of educational services. Mar 26 - The UK VAT Gap (difference between the VAT HMRC expects vs receives) widens by £3bn for 2024/25 from initial estimate of £8.9bn to £11.9. Carbon Border Adjustment Mechanism - HMRC Technical Consultation on Draft Legislation open until 24 March 2026. UTT - Feb 26 - Upholds FTT decision in Lycamobile vs HMRC case confiming that payment for plan bundles are subject to VAT immediately and not when customers access or use associated benefits. Feb 26 - British Independent Retailers Association (BIRA) and coalition of key retailers and tax experts write to UK Treasury calling for consultation on online VAT reform. HMRC - Guidlines for Software Developers using Generative AI Products used for Tax & VAT Reporting Budget 2025, Climate Change Levy Exemption for electricity used in electrolysis to produce hydrogen and natural gas used as a source of carbon dioxide to produce sodium bicarbonate from soda ash will be exempt from the Climate Change Levy (CCL) From 2 Jan 2026, Online Taxi operators can no longer use the Tour Operators Margin Scheme loophole. VAT must be paid on full ride fare. (Not commission only) FTT - Rules that the supply of Locum (temporary medical staff) is exempt under 5, Group 7, Schedule 9, VAT Act 1994. ICAEW - Finance Bill Threat to Tax Advisors 2026 - Read ICAEW Article! Electronic Invoicing will be Mandatory in the UK from 1 April 2029 for all B2B transactions. Hotel La Tour vs HMRC - Supreme Court Judgement 17 December 2025 - Input VAT Recovery Sale of Shares. Autumn Budget UK 2025 - Key VAT & Tax Changes. HMRC Issues New VAT Grouping Rules For Overseas Establishments TSI Instruments vs HMRC (FTT) Recovery of Input VAT disallowed (non owner of the goods) HMRC - Issues GFC 13 - Help ensuring documents filed with HMRC are correct and complete. 26.03.2026 - HMRC Publish Research findings into SME e invoicing use and attitudes. Summary 59% understand definition of e invoicing and 29 % use e invoicing. Input Tax - HMRC Late Claims Guidance Supreme Court - NHS Parking Trusts are a taxable person for VAT on car parking Hippodrome Casino vs HMRC (Court of Appeal) Standard PX Method Applies and not Floor Space. Prudential Assurance Co vs HMRC VAT Case - Tax Point for payments after entity has left VAT Group. JP Morgan Chase vs HMRC - Inter-group supplies (single or multiple taxable supplies) Global VAT News - Global VAT News Headlines June 26 - OECD - Proposed targeted amendments to the Model Reporting Rules for Digital Platforms to support exchange of tax information June 2026 - Moldova to introduce VAT on international purchases from online market places to protect domestic traders. All goods will be subject to VAT at 20% from 1 October 2026. May 2026 EU Court of Justice rules that Stellantis Portugal - Inter-company Transfer Pricing adjustments with local dealers were not vatable supplies and thus VAT was not due. Mar 2026 - European Commission launches public consultation on the revision of the eInvoicing Directive Mar 2026 - From 10 April 2026, Gibraltar is introducing a new Transaction Tax of 15% on imported and locally Manufactured goods. The rate will rise to 16% in 2027 and 17% in 2028. Mar 26 - South Africa announces increase in VAT registration threshold from R1m to R2.3m and the voluntary registration threshold from R50,000 to R120,000, effective 1 April 2026. UAE Ministry of Finance - Feb 26 - Publishes E Invoicing Guidlines. Nigeria Revenue Service (Feb 26) Implementation time line guide for e invoicing (MBS) guide. British Columbia - From 1 October 2026 - Provincial Sales Tax (PST) applicable to Accounting, Architectural, Engineering, Security Services, Property Management Services. Also PST Exemptions for Basic Cable Television, Residential Landline Telephone Services, and some Clothing and Footwear items will be Eliminated. CJEU AG Brkan opinion on the VAT treatment for the Management of Credit where the loan has been sold (Securitisation). Where Credit Management Services continue to be provided by the original loan issuer, the services are not Exempt under art. 135(1) (b) EU VAT Directive. (Basically Taxable) Lebanon - VAT increased From 11% to 12% to fund increases in Public Sector Pay. OECD - Digital Continuous Transaction Reporting - Jan 2026 Mauritius Revenue Authority - Foreign suppliers of Digital or Electronic Services in Mauritius must register with the MRA and account for VAT in Mauritius EU Council agrees to levy 3 Euros on small parcels valued at less than 150 Euros entering the EU from 1 July 2026. UAE - Ministry of Finance - From 1 Jan 2026 -VAT Changes to Reverse Charge Invoicing & 5 Year Limit to Input Tax Recovery. RCV - Applies to Scrap Metal Trading From 14 Jan 2026. European Commission Releases Report "Mind the Gap" Estimating the EU VAT compliance gap is EUR 128bn. Portugal Introduces VAT Grouping for Tax Periods Starting 1 July 2026. This will allow VAT amounts owing and recoverable to be netted within the group. However inter-group transactions remain Vatable. Ireland - VAT Groups - Only Branches and Head Offices Established in Ireland Allowed. CJEU - Arcomet Towercranes - Transfer Pricing adjustments - Potentially Vatable India GST Reforms - 2025 Russian Ministry of Finance - Raising VAT rate From 20% to 22% from 1 Jan 2026. Sweden will Temporarily reduce VAT on Food From 12% to 6% from April 2026 OECD - Tax Administration and Digitalisation Report 2025 EU Council - EU Customs Framework Reform Argentina "Super VAT" Proposal

Guide on the HMRC rules around VAT on employee expenses and when VAT can be recovered on employee expenses such as travel, Hotels, Meals, Mobile Phones, Introduction Businesses can recover the VAT on most employee expenses but there are conditions and blocks on their recovery in some instances. Input VAT is Recoverable on the Following Employee Expenses Meals Meals provided via canteen facilities to staff Subsistence payments made to employees for meals Subsistence payments for meals made to Sole Traders, Proprietors, Directors while working away from their normal place of work. Hotel Accommodation Cost of hotel stay while away from the normal place of work Travel Cost Input VAT incurred on travel for Business purposes is recoverable input VAT Domestic Accommodation If your business provides domestic accommodation for employees, you can treat VAT incurred on costs of providing the accommodation as input tax. Part of a domestic accommodation (such as a room) used as an office can be apportioned and any VAT incurred treated as the businesses recoverable input VAT. Mobile Telephones Provided to Employees VAT on the purchase and connection of a mobile phone - Where a business provides its employees with mobile phones for business use then, regardless of whether it allows private use, it can treat as input tax all the VAT it incurs on purchasing a phone and on standing charges for keeping it connected to the network providing the charges do not contain any element for calls. Business only call charges - If a business does not allow its employees to make private calls, all of the VAT incurred on the call charges is input tax. HMRC will accept this is the case where a business has imposed clear rules prohibiting private use and enforces them. But HMRC realises that in practice businesses with such a policy often tolerate a small amount of private calls. HMRC is prepared to treat such minimal use as being insignificant for VAT purposes and it will not prevent a business treating all the tax it incurs on calls as input tax. Charges for private calls - If a business charges its employees for any private calls they make, then it may treat the VAT incurred on the calls as input tax, but must account for output tax on the amounts it charges. Free private calls - I f a business allows its employees to make private calls without charge, then it must apportion the VAT incurred on the call charges. It is not appropriate for businesses to adopt an alternative treatment of accounting for output tax on the private use. Fixed monthly charges - Where the phone package allows the business to make a certain quantity of calls for a fixed monthly payment and there’s no separate standing charge, then it must apportion the VAT on the total charge for the package. Similarly, where the contract is for the purchase of the phone and the advance purchase of a set amount of call time for a single charge, the apportionment will also apply to the whole charge. Contains public sector information licensed under the Open Government Licence v3.0 Employee Expenses & VAT

Construction industry VAT Guide - how VAT is applied in the Construction Industry for new buildings, renovations, etc. CIS and domestic reverse charges, VAT rates and much more Introduction The Construction of new buildings and renovations to existing buildings are normally charged at the Standard Rate of VAT 20%. Services of trades persons such as carpenters, plumbers, electricians etc are usually charged at the Standard Rate of VAT 20%. However there are instances where construction can be Zero Rated and no VAT charged. Buiding new houses and flats - Don't have to charge VAT for Materials and Labour (provided they meet the definition of a new house) = Zero Rated Construction of new qualifying dwellings and communal residential buildings, and certain new buildings used by charities = Zero Rated 0% Conversion for a housing association of a non-residential building into a qualifying dwelling or communal residential building = Zero Rated 0% Conversion (other than for housing associations) of a non-residential building into a qualifying dwelling or communal residential building and conversions of residential buildings to a different residential use = Reduced Rate 5% Renovation or alteration of empty residential premises = Reduced Rate 5% Approved alterations to listed dwellings and communal residential buildings, and certain listed buildings used by charities (rate shown with effect from 1 October 2012) = Standdard Rated 20% Alterations to suit the condition of people with disabilities = Zero Rated 0% Reliefs from VAT for disabled and older people. See (VAT Notice 701/7) Installation of energy saving materials; and grant funded heating system measures and qualifying security goods = Reduced Rate 5% (Energy-saving materials and heating equipment (VAT Notice 708/6) Development of residential caravan parks = Zero Rated 0% First time gas and electricity connections = Zero Rated 0% (Fuel and power (VAT Notice 701/19) Construction work on children’s homes = Zero Rated 0% Construction work on residential care homes = Zero Rated 0% Construction work on hospices = Zero Rated 0% Construction work on student accommodation = Zero Rated 0% Construction work on school boarding houses = Zero Rated 0% Installation of mobility aids for the elderly for use in domestic accommodation = Reduced Rate 5% Home improvements on domestic property situated in the Isle of Man = Reduced Rate 5% Isle of Man VAT Notice Home improvements available from: Note: There are several conditions that have to be met to be able to zero rate and apply reduced rates as above. Please refer to the attached HMRC notice Buildings and construction (VAT Notice 708) Construction Indu str y Scheme The Construction Industry Scheme is a HMRC process whereby Contractors working in the building and construction industry deduct tax from payments made to their subcontractors and pay the money deducted over to HMRC. To do this, contractors are required to register with HMRC. Subcontractors are not required to be registered but if they don't they will have tax deducted at the higher rate (not 20%) by their contractor making payments to them. The tax deductions are a made from the non materials portion of the amounts being paid. Contractors Sole Traders Limited Companies Partnerships Government Departments Local Councils Businesses spending £3M in a year on construction Note contractors can als o be subcontractors when the do work for other contractors Construction Industry Scheme (CIS) and Reverse Charge VAT Prior to 1 March 2021, subcontractors invoicing there VAT registered contractors for work done would as normal be required to include VAT at 20% on their invoices. From 1 March 2021 the domestic VAT reverse charge must be used for most supplies of building and construction services. The charge applies to standard and reduced-rate VAT services: For individuals or businesses who are registered for VAT in the UK Reported in the Construction Industry Scheme What does Reverse Charge Mean? It means that instead of charging VAT on your invoice to your contractor, you just show the net amount and add the words "Reverse Charge Applies", "Customer to Account for VAT" on the invoice. Your contractor will then be required to account for the VAT that you would normally have charged (Pre introduction of Reverse Charge Rules) on their VAT return in Box 1 (VAT on Sales) and also in Box 4 (VAT on Purchases). Therefore in effect the Contractor will not pay any VAT to HMRC as the Box 1 VAT amount payable will be cancelled out by the Box 4 VAT recoverable amount due from HMRC. Example: Subcontracor A has done work for £100,000 for Contactor B. Subcontractor A will include £100.000 on their invoice and will not include any VAT, just the words "reverse charge" "customer to account for VAT". The contractor will include £20,000 reverse charge output VAT (20% of £100,000) in their sales VAT (box 1) and £20,000 reverse charge input VAT recoverable in their purchase VAT (box 4) on their VAT return when they receive the invoice from subcontractor A. Therefore contractor A pays no VAT to HMRC. Also contractor B pays no VAT to HMRC as their VAT return will show £20,000 reverse charge output VAT payable and £20,000 reverse charge VAT recoverable from HMRC. So in effect a nill box 5 and no VAT to pay or recover from HMRC. When should Subcontractors use the Reverse Charge Procedure They must use the reverse charge for the following services: constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration painting or decorating the inside or the external surfaces of any building or structure services which form an integral part of, or are part of the preparation or completion of the services described above - including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works When should Subcontractors not use the Reverse Charge Procedure Do not use the reverse charge for the following services, when supplied on their own: scaffolding hire (with no labour) carpet fitting making materials used in construction including plant and machinery delivering materials work on construction sites that’s clearly not construction - for example, running a canteen or site facilities extracting minerals (using underground or surface working) and tunnelling, boring, or construction of underground works, for this purpose drilling for, or extracting, oil or natural gas manufacturing building or engineering components or equipment, materials, plant or machinery, or delivering any of these to site manufacturing components for heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivering any of these to site the professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants making, installing and repairing art works such as sculptures, murals and other items that are purely artistic signwriting and erecting, installing and repairing signboards and advertisements installing seating, blinds and shutters installing security systems, including burglar alarms, closed circuit television and public address systems For more information on how to apply Reverse Charges in the Construction Industry please refer to HMRC's Link below. Domestic reverse charge procedure (VAT Notice 735) -Contains public sector information licensed under the Open Government Licence v3.0. Construction and VAT - Comprehensive VAT Guide

Are you a UK Business buying services such as legal, advertising or consultancy from non UK suppliers, then read our comprehensive guide on how reverse charge VAT applies. Introduction Reverse Charge VAT, means that the customer (Business Customers) is accountable for paying the output VAT (VAT on Sales) in relation to a suppliers invoice for services. There are two aspects of reverse charge VAT as follows: International Domestic International Applies to both sales and purchases of services (outputs and Inputs). Reverse Charges Applied to Sales / Outputs Where a UK VAT registered supplier supplies services to a non UK customer and the services would normally be subject to VAT in the UK, the supplier would not include UK VAT on their invoice to the customer as the supply is outside the scope of UK VAT. Instead the supplier would write the words "reverse charge applies" on the invoice and as such this would inform the customer that they may be required to self account for VAT in their local jurisdiction. So for example a UK consultancy firm invoicing a business customer in France where the French customer would have to pay French Reverse Charge VAT on the total value of the invoice to the French Tax Authorities. Reverse Charges Applied to Purchases / Inputs Where a UK business purchases services from a non UK supplier primarily to be consumed in the UK, they will have to self account for reverse charge VAT at 20% to HMRC based on the total value of the invoice from the non UK supplier. The main purpose here is to ensure UK businesses that purchase services from UK suppliers are not placed at a disadvantage to businesses that source services from non UK suppliers and save 20% UK VAT. How it works - The UK VAT Registered business customer will have to include 20% VAT applied to the total value of the overseas invoice on their VAT return in Box 1 (VAT Payable). For example if a business seeks legal advice from a supplier based in France and the total value of the invoice is £1,000, then the UK business customer will have to self account and pay £200 output VAT to HMRC. However the UK business customer will be able to recover all or some of this VAT from HMRC and can either put the same VAT figure as in Box1 in box 4 (Input VAT Recoverable) on their VAT return or a portion of the VAT based on a specific percentage they are allowed to recover. If the business only makes taxable supplies to their customers, then they will be able to recover the reverse charge payable to HMRC in full and as such the effect would be a nill payment to HMRC as amounts in box 1 (VAT Payable) will equal box 4 (VAT Recoverable) on their VAT return. Where the purchaser is a partial exempt business (see how VAT works button), it will only be able to recover a portion of the reverse charge VAT from HMRC depending on the purchasing businesses Partial Exemption Recovery Rate. Note: Most services purchased from non UK suppliers by UK VAT registered businesses will be in scope of reverse charges unless they are: Property related (Land and Buildings) transactions including hotel bills for non UK stay Admission to non UK events Transport related such as taxis while travelling on business abroad. Services that would normally be Exempt in the UK like Financial Services such as insurance, the purchase of shares. Services purchased from non UK suppliers such as the ones below will all be Reverse Chargeable in the UK at 20% Accountancy Services Consultancy Services Legal Services Supply of staff or contractors Advertising Domestic Domestic reverse charge is similar to International Reverse Charges in that the customer is required to self account for VAT. The difference is that domestic reverse charges applies to specified transactions between UK to UK businesses . The main aim here is to prevent / reduce, eliminate fraudulent traders who set up companies, issue VAT invoices for goods and collect the VAT and fail to declare this to HMRC. (Basically the responsibility for paying output VAT is switched from the supplier to the customer) How it works - Invoices issued by VAT registered UK Business Suppliers to VAT registered UK Business Customers will show the net amounts only and no VAT applied. On receipt of these invoices for services, the UK business customer will self account for VAT at 20%. The customer will be responsible for paying this VAT to HMRC and if they only make taxable supplies in their business, they will be able to recover this VAT and in effect there will be a nil payment due to HMRC. So box 5 VAT payable / recoverable will be zero. For Example - if a UK subcontractor in the construction industry invoices its main UK contractor for services which are covered by the Construction Industry Scheme , for £100,000 then their invoice to the contractor will only show £100,000 and carry the words "reverse charge applies". The UK subcontractors VAT return will only include £100,000 sales in box 6 on their VAT return. The UK contractor will then have to self account for £20,000 of Output VAT on their VAT return under the CIS reverse charge VAT procedure by including this amount in Box 1 (VAT payable) on their VAT return. Additionally the contractor (if they only make taxable supplies (standard and zero rated supplies) can recover this £20,000 from HMRC by including the amount in Box 4 on their return. This means their box 5 payable amount will be zero. However the UK contractor will also need to include the net amounts £100,000 in both Box 6 & 7 on their VAT return. Than Following Services are in scope of UK Domestic Reverse Charges: Mobile Phones Computer Chips Wholesale Gas and Electricity (not Gas and Electricity to retail consumers) Wholesale Telecommunication Services Construction Industry (Construction Industry Scheme Contactors) For more information please read: Domestic reverse charge procedure (VAT Notice 735) Reverse Charge VAT - Guide on How Reverse charge VAT is Applied

US Sales Tax News and Guide - Stay up to date with the latest news and articles covering sales taxes for different states, tax rates, legislation and political arena. US Sales Tax News - Read the latest US Sales Tax News Headlines Updated 24/7 US Sales Tax News articles - Read the latest US sales Tax news including articles covering individual states, sales tax rates, legislation and the political arena addressing issues concerning sales tax and much more. Sales Tax in the United States is a consumption tax levied on the sale or lease of goods and services. Unlike VAT which is a general consumption tax, sales tax is only added to the final retail sale which retailers calculate and collect from consumers and then periodically remit to the state. There is no single national sales tax rate and as such different states will apply different rates and exemptions. VAT Digital. Com Demystifying US Sales Tax

VAT digital media - Global VAT, GST, E invoicing and Key Case Law updates from around the globe. Making Tax Digital - Landlords & Self Employed Applies from 1 April 2026 VAT Digital Media - Keep up to Date with the latest VAT, GST and E Invoicing News UK E Invoicing - Mandatory 1 April 2029

Vatdigital.com - Read the latest e invoicing news headlines and updates on Global e invoicing mandates from around the globe. from multiple global news sites. E Invoicing News - Global e Invoicing News Headlines & Updates The Global Finance and Tax digitalisation landscape is rapidly advancing with the development and deployment of e invoicing and other artificial intelligence based systems and software. We are at the point of no return where the E2E digitalisation and automation of the VAT and GST function is becoming a reality. Gone are the days of complex manual adjustments on spreadsheets and non-transparent system to system interfaces especially with the advance of software such as Alteryx and cloud base Data Lake solutions such as Snowflake, Databricks and Amazon VAT Digital. Com Demystifying VAT

International VAT News - read our collection of international VAT news articles from multiple news websites from around the globe including UK and global sites. "Take the heavy lifting out of your role search!" International VAT News - Read the latest VAT News Headlines Updated 24/7 International VAT News articles from across the globe - providing you with up to date information on changes in global VAT & GST rates & legislation, the ongoing digitalisation of VAT functions and processes including AI and other smart technologies. VAT Digital. Com Demystifying VAT

VAT and Charities - Charities and VAT - Comprehensive guide on how VAT is applied to services supplied by charities and the purchases they make including the rules around VAT recovery. What are Charities A charity is an institution that is established for charitable purposes and public benefit only. It can't be set up for both charitable and non charitable purposes and also be considered a charity. A charity’s purpose is usually set out in the ‘objects clause’ of its governing document (the legal document that creates a charity and says how it should be run). For a charity to be legal, it must be registered with the Charities Commission and HMRC (if it wants to benefit from reduce rates of VAT and Zero Rating) Charities can carry out trading activities, provided they are for raising money for their charitable cause. Non charitable purposes are as follows: Political Purposes Non charitable p urposes Unlawful purposes Examples of charitable purposes: The prevention or relief of poverty The advancement of education The advancement of religion The advancement of the arts, culture, heritage or science Environmental protection Development of sport Animal Welfare Womens rights Charities and VAT Charities that trade and make taxable supplies will be required like any other business to register for VAT where their turnover exceeds £90,000. Similar to other enterprises, charities can register for VAT volunarily if they want to claim back VAT from HMRC on their purchases. Note - this is only benificial if the charity is making taxable supplies (standard, reduced or zero rated). If the charity is making purely exempt supplies, then any input VAT incurred will be irrecoverable. Like many normal businesses, charities can make either Standard Rated, Reduced rate, Zero Rated or Exempt sales or supplies. In addition to these a charity can make non business related supplies which are deemed outside the scope of VAT. VAT Recovery Similar to other businesses, the level of VAT recovery by charities is determined by the nature of the supplies it makes. If it makes wholey taxable sales, then it will be able to recover all of the input VAT on its business related activities. If it makes solely exempt sales, then it will not be able to recover input VAT in relation to the business portion of these sales. If it makes a mixture of exempt, standard, reduced and zero rated supplies then it will be able to recover a portion of the input VAT it has incurred on business related activities. In this case, the proportion of VAT recovery on its business expenses is determined using a formula normally based on Taxable Sales (including zero rated and reduced rate) / Total Sales (Std, Zero, RR, Exempt) = VAT Recovery Rate Percentage Types of Income normally Generated by Charities and the VAT liability Revenue from Admission to Buildings such as museums, art galleries etc = Standard Rated 20% ( unless admission fee is for fund raising event or is covered under the cultural events exemption) Revenue in the form of Donations in exchange for admission to the event = 20 % Revenue from Advertising in Brouchures = Standard Rated 20% (unless advertising on behalf of another charity) The sale of advertising space in brochures or programmes for a fundraising event is exempt from VAT. But the sale of such space to another charity can be zero-rated. The sale of advertising space in brochures or programmes for a fundraising event is exempt from VAT. But the sale of such space to another charity can be zero-rated. Revenue from affinity credit cards where the charity allows a card provider, bank or other financial institution to access to the charity’s membership or mailing lists or mailing of the card provider’s promotional literature to members, endorsement of the card and marketing of the card by the charity to its members or supporters, the right to use the charity’s name and logo on the card and on the card provider’s promotional literature = Outside the Scope of VAT 80 % and Standard Rated 20% If the charity is acting as an intermediary and engaging with members to take up services from the card provider, bank etc then the services are likely to be Exempt from VAT Sale of donated items in a charity shop = Zero Rated (conditions apply) Sale of donated items at a fund raising event = Zero Rated Goods purchased for resale by a charity = Standard Rated 20 %, Zero Rated if childrens clothes or books Catering at a fund raising event = Exempt Education and Training = Exempt Sponsorship = Standard Rated (where the charity provides something in return) If nothing iss provided in return then maybe able to treat as non business expense and outside the scope of VAT Grant Funding = Outside the Scope of VAT (provide nothing is supplied by the charity in return) Hiring out of Buildings and Halls = Exempt (unless opted to tax and this standard rated) Note: the above Revenue streams are not exhaustive and or the conditions that apply. For more detailed information, please read the below HMRC notice in the link attached. VAT Relief on Purchases made by Charities Certain goods and services are zero-rated or reduced-rated when bought by charities, regardless of whether the charities are registered for VAT or not. For each of these reliefs specific conditions have to be met. Charities wishing to take advantage of these reliefs must provide their suppliers with eligibility declarations certifying that the conditions have been met for that relief. Advertising services provided to charities = Zero Rated Fuel and Power used for qualifying purposes such as heating a childrens home or home for the elderly = Reduced Rate 5% The construction of buildings, and certain works to protected buildings, intended to be used solely for non-business purposes can be zero-rated subject to certain criteria being met. For more information on VAT relief for charities, please see the HMRC link below. VAT for charities: What qualifies for VAT relief - GOV.UK Autumn Budget 2025 From April 2026, a new VAT relief will be introduced for businesses that donate goods to charities. The relief removes the requirement for businesses to account for VAT on eligible goods that are donated for onward distribution or use in a charity or eligible organisation’s services. Value limits will apply to donated items to safeguard against misuse, with higher limits available for listed goods. See link to HMRC policy paper below. VAT relief for business donations on goods to charities -Contains public sector information licensed under the Open Government Licence v3.0. Charities And VAT - Guide on How VAT is Applied