Charities and VAT
It is often a misconception that charities are exempt from registering for VAT. They are not.
If a charity makes taxable business supplies that are above the VAT registration threshold, currently £90,000, then it must register for VAT.
It is important that charities understand the VAT status of their income. Firstly, they need to know if their income is business income or non-business income.
Then they need to know whether their business income is:
- Outside the scope of VAT.
- Exempt.
- Standard rated.
- Zero rated.
This will help the charity understand whether there is a requirement to register for VAT, or whether they can voluntarily register for VAT.
The nature of a charity’s income then determines how much input VAT the they can claim.
Metis Tax can undertake VAT reviews for charities.
