Vat Categories and Rules – a guide

Some Basic Rules

A Reduced Rate of Vat applies to purchases of electricity, gas, heating oil, solid fuels and sanitary products.

A transaction is ‘Outside the Scope’ of Vat when it is not a supply of goods or services, eg wages, drawings, loan repayments, on-street parking, Council Tax and Business Rates, MOT’s, gratuities and charitable donations.

A Vat registered trader can reclaim Vat on purchases as quoted on the supplier invoice. For invoices of less than £250, that do not quote Vat, but do show a Vat number and other basic information, the appropriate amount £ of Vat can be assumed, calculated and reclaimed.

Vat, although charged, cannot be reclaimed on the cost of entertainment of customers.

Motor cars – purchased, Vat cannot be reclaimed. Subsequent sale is exempt.

STANDARD

Restaurant food

Hot takeaways

Partly+ coated biscuits and shortbread

Decorated ginger bread men

Sweetened cereal and muesli bars

Crisps and nuts (salted)

Ice cream / frozen yogurt, arctic

rolls

Bottled water

Fruit juice

Confectionery

Alcoholic drinks

Taxi fares

Commercial buildings

Pet food

All supplies of goods and services are assumed standard rated, unless otherwise designated.

ZERO

Food*

Books

Newspapers and magazines

Clothes and shoes for babies and children

Charity shop sales of donations

Plain nuts and tortilla chips

Frozen meals

Water and sewerage

Seeds

Drugs

Caravans and houseboats

Public transport

New homes

Protective equipment

*Bread, cakes, cream cakes, teacakes, caramel shortbread, Jaffa cakes flapjacks, plain cereal cakes, milk and milk drinks, coffee and tea.

EXEMPT

Insurance

Financial services:

Bank charges and interest

Entrance to museums and zoos

Subscriptions to non-profit bodies

Tamar Bridge toll

Art

Education

Betting, bingo, lottery

Medical treatment and healthcare Sports facilities

Postal services

Second sale+ houses

Second hand car sales

Beware! The devil is in the detail.  Seemingly similar supplies as described here, can have different categorisations.

 

This page can only be taken as a guide. For the definitive HMRC guide, click here.

 

 

2017-04-04T11:34:00+00:00 September 21st, 2016|Resources|