How VAT works
What VAT is charged on
VAT is charged on things like:
- goods and services (a service is anything other than supplying goods)
- hiring or loaning goods to someone
- selling business assets
- commission
- items sold to staff - for example canteen meals
- business goods used for personal reasons
- ‘non-sales’ like bartering, part-exchange and gifts
These are known as ‘taxable supplies’. There are different rules for charities.
VAT is not charged on goods or services that are exempt from VAT or are unaffected by VAT (‘out of scope’).