Not For Profits

VAT Non-Profit Organisation Advice

At The VAT People, our specialist consultants have provided expert VAT advice to hundreds of not-for-profit (NFP) sector organisations, assisting them in avoiding costly mistakes in this complex area.

With more than 20 years in the industry, we are well-placed to assist your organisation with all aspects of VAT planning, regardless of your individual requirements.

Many of our senior consultants have professional experience within HMRC, meaning we can apply our knowledge of the inner workings of the body to give you the most accurate and effective advice. It also means we can give practical advice to help you ensure you remain compliant with HMRC regulations at all times.

Our VAT specialists can help you to understand and manage all of your VAT obligations. For more information about our services, contact us by calling 0161 477 6600 or fill out an online enquiry form and we will be in touch.

VAT for charities and other not-for-profit organisations is a grey area that often needs further explanation due to the fact that the distinction between a ‘business' activity and a ‘non-business' activity in the eyes of HMRC is not always clear.

With the tailored guidance from our VAT specialists, we can help shed light on this grey area, making you aware of your obligations and providing bespoke assessments and recommendations for your organisation to ensure you have all the knowledge you need. Whatever VAT issues you may face, we have the experience needed to make you compliant.

FAQs on VAT advice for not-for-profit organisations

Are there VAT reliefs and exemptions available to not-for-profit organisations?

There are a number of specific reliefs from standard-rated VAT that are included in the UK legislation which a not-for-profit entity may be entitled to use when incurring expenditure. 

Can I seek building construction and property VAT advice?

The construction of buildings intended to be used solely for non-business purposes by a charity can be zero-rated, subject to certain criteria being met. Our VAT advice services extend to construction and property compliance, whether they qualify for partial exemption or are outside of the exemption scope.

Commercial building to residential use conversion

The VAT liability of converting a building that was formerly used for commercial purposes into a dwelling or a relevant residential purpose building is VATable at 5%. 'Relevant residential purposes' includes home or accommodation for children/students, personal care homes and hospices.

Relief is also available for projects that involve a change in the number of dwellings in a building.

What are the UK VAT exemption rules on power and fuel?

A charity can pay VAT at the reduced rate on fuel and power that is used for non-business purposes. Furthermore, it can pay a reduced rate on maintaining equipment connected with the supply.

This relief applies to non-registered charities, providing charitable status is recognised by HMRC. There are rules on the apportionment of fuel and power used for both non-business and business activities, and whether relief can apply to the entire supply.

Relief also extends to the installation of energy-saving materials, such as central heating and insulation in residential accommodation, or in a building used solely for relevant charitable purpose. Those not-for-profit businesses using electricity or gas wholly or partly for charitable non-business purposes are also entitled to relief on Climate Change Levy (CCL) from standard to reduced rate.

Get in touch with our consultants who have particular expertise with VAT planning and reliefs on all aspects of business and not-for-profit.

How does VAT affect vehicles?

A charity can zero rate the purchase or hire of some vehicles for their use in the not-for-profit organisation's operations. The rules regarding the use of motor vehicles are quite detailed, so such organisations should look into this.

What VAT rate is advertising for charities?

A charity is able to acquire certain advertising services at the zero rate of VAT.

How does VAT apply to non-profit organisations?

Although non-profit organisations operate without the aim of making a profit, they are not automatically exempt from income tax or from VAT. They may be required to register and account for VAT, particularly if they sell goods or provide services that are subject to VAT.

How does VAT work for non-profit organisations?

VAT works similarly for non-profit organisations as it does for commercial businesses. If a non-profit organisation provides taxable goods or services to clients, it may need to charge VAT on its sales and can potentially reclaim VAT on eligible purchases.

What is the VAT registration threshold for non-profit organisations?

The VAT registration threshold is £85,000. This means that if your non-profit organisation's VAT taxable turnover is more than this over a 12-month period, you are required to register for VAT. However, this figure can change in the annual Budget, so it's crucial to keep up to date.

Can non-profit organisations reclaim VAT on their purchases?

Yes, non-profit organisations can potentially reclaim VAT on their purchases. However, it's important to note that only VAT on purchases made directly for the organisation's VAT-taxable activities can be reclaimed.

What are the consequences of not registering for VAT?

Failure to register for VAT when required to do so can lead to penalties from HMRC. These penalties can be financial and may include interest charges on unpaid VAT. Serious violations can even result in legal action.

How can non-profit organisations ensure they comply with VAT regulations?

Ensuring compliance with VAT regulations involves understanding your obligations, accurately calculating VAT, submitting timely returns, and maintaining proper records. This can be complex, which is why many businesses and non-profit organisations choose to seek the services of professionals like The VAT People.

Are there any special VAT schemes available for non-profit organisations?

Certain VAT reliefs and exemptions are available to non-profit organisations, depending on their activities. These could include exemptions on certain types of education and training, fundraising events, and the sale of donated goods, among others.

Can non-profit organisations claim VAT relief on certain goods and services?

Yes, non-profit organisations can claim VAT relief on certain goods and services. These could include advertising costs, equipment for disabled people, and construction of buildings for charitable use. The rules around this are complex and it's essential to get expert advice to maximise these opportunities.

We are a VAT specialist firm that takes a personalised approach to guide your organisation through the maze of VAT regulations. We are dedicated to ensuring your non-profit organisation can focus on delivering its core mission, whilst we handle the complexity of VAT compliance and planning. From the moment of VAT registration, our specialist knowledge of HMRC guidance is seamlessly integrated within your business processes, allowing you to fulfil your obligations without halting any operations.

Contact us

To find out more, get in touch with us today on 0161 477 6600 or fill in an online enquiry form with any other queries. Discover more about the people who’ll be working alongside you to make the most out of your VAT opportunities on our team page.