Forming A Charity and VAT

Q: I am forming a charity to provide funds for a local children's hospice. Am I right in thinking that because we are a charity, we will not be charged VAT on the equipment we donate?

Helen, Bristol

A: Registered charities are not exempt from registering for VAT. If business activities exceed the VAT registration limit, the charity must register for VAT.  The current registration limit is £68,000 and if the charity is VAT registered, it will be able to reclaim the input VAT charged on purchases

It is worth checking the VAT status of the items you supply, as some carry a reduced rate of 5% and some are zero rated, meaning they have no VAT charged on them at all. Examples include some advertising services and certain equipment supplied in caring for the disabled.

You should speak to your local TaxAssist accountant who will be able to supply more details on the rate of VAT that applies to the sales you make.

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