Guide

Businesses and charging VAT

Last updated: 16 May 2017

When not to charge VAT

You can't charge VAT on exempt or 'out of scope' items.

Exempt goods and services

Exempt goods or services are supplies that you:

  • can't charge VAT on
  • must not include in your VAT records

If you buy or sell an exempt item you should still record the transaction in your general business accounts. Examples of exempt items include:

  • insurance
  • postage stamps or services
  • health services provided by doctors

Get a list of goods and services that are VAT exempt.

If you start selling items that aren't exempt

Businesses that sell only VAT-exempt goods and services don't have be registered for VAT.

If you start selling items that aren't exempt, you must register for VAT within 30 days. You may get a penalty if you don't.

Out of scope

Some goods and services are outside the VAT tax system so you can't charge or reclaim the VAT on them. For example, out of scope items include:

  • goods or services you buy and use outside of the EU
  • statutory fees - like the London congestion charge
  • goods you sell as part of a hobby - like stamps from a collection
  • donations to a charity - if given without receiving anything in return
Businesses and charging VAT
When not to charge VAT