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 £85,000.

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 isn’t:

  • exempt from VAT
  • outside the scope of VAT

Check what VAT rate applies to your charity’s activities.

Exempt from VAT

You can’t charge VAT on exempt goods and services (such as the provision of welfare services). You can’t normally reclaim VAT on any goods and services purchased in relation to an exempt business activity.

You can’t 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 can’t 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 doesn’t 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 EU

If you supply goods outside the EU 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.