Charities pay VAT on all standard-rated goods and services they buy from VAT-registered businesses. They pay VAT at a reduced rate (5%) or the ‘zero rate’ on some goods and services.
small-scale use (up to 1,000 kilowatt hours of electricity a month or a delivery of 2,300 litres of gas oil).
If less than 60% of the fuel and power is for something that qualifies, charities pay the reduced rate of VAT on the qualifying part and the standard rate (20%) on the rest.
Qualifying fuel and power include gases, electricity, oils and solid fuels (such as coal). It does not include vehicle fuel.
VAT-free goods from outside the EU.
Charities don’t pay VAT on goods imported from outside the EU as long as they’re benefiting people in need by providing: basic necessities, goods to be used or sold at charity events, equipment and office materials to help run charities for the benefit of needy people and goods to help deal with disasters within the EU.
Any opportunity to reduce costs - by paying VAT at less than the standard rate on specific services and supply of goods - will be welcomed by charities and is advice that practitioners can readily supply.
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