VAT for charities
Charities and VAT registration
As a charity, you must register for VAT with HM Revenue and Customs (HMRC) if your VAT taxable turnover is more than £90,000.
You can choose to register if it’s below this, for example to reclaim VAT on your supplies.
If you’re registered for VAT you must send a return every 3 months.
Work out your taxable turnover
To work out your VAT taxable turnover add up the total value of everything you sell in a 12-month period that is not:
- exempt from VAT
- outside the scope of VAT
Check what VAT rate applies to your charity’s activities.
Exempt from VAT
You cannot charge VAT on exempt goods and services (such as the provision of welfare services). You cannot normally reclaim VAT on any goods and services purchased in relation to an exempt business activity.
You cannot register for VAT if all your business activities are exempt from VAT.
Outside the scope of VAT
Income from non-business activities is ‘outside the scope’ of VAT (you cannot charge or reclaim VAT on them). This includes:
- donations where nothing is given in return
- grant funding given to support your charitable activities where nothing is given in return
- activities where your organisation does not make a charge
Read more about what counts as a business activity.
Charging VAT
Once you’ve registered you must charge VAT at the correct rate on everything you supply.
Reclaiming VAT
If you’re registered you may be able to reclaim VAT when you file your VAT Return.
You can reclaim the VAT you were charged on goods and services relating to your taxable business activities.
Exports outside the UK
If you supply goods outside the UK free of charge (for example as aid), you can treat this as a zero-rate business activity (0% VAT) so you can reclaim the VAT on any associated costs.