What Is VAT Exempt?

The government exempts a number of goods and services from the payment of VAT.

The value added tax (VAT) is levied by countries in the European Union on the sale of goods and services at all of the steps in the production chain. This is different from sales taxes in the United States and other countries, as sales tax is only assessed on the end consumer. With VAT, businesses pay the tax as well, even if their business focuses on business-to-business sales. However, European governments individually discount or exempt certain items and services from the payment of VAT. Many goods and services are exempt from VAT or have a 0 percent VAT rate in the United Kingdom.

Food

Most food destined for consumers in the United Kingdom is exempt from VAT. This includes fruit, vegetables, meat, food mixes, vegetable oils, canned food, a number of convenience foods, bread, cakes, milk and tea. However, foods like potato chips, alcoholic beverages and ice cream as well as take-out and restaurant food are not VAT exempt.

Raw or unprocessed food that is suitable for human consumption can be sold to the public or processing companies with no VAT.

Health, Education, Leisure and Culture

All costs and purchases for gambling, betting, cultural events, sports activities, medical care, health services and official education programs are VAT exempt.

Property, Land, Loans and Insurance

The sale, leasing or grant to occupy property and land are exempt from the payment of VAT.

Financial loans as well as insurance services and transactions are exempt from the payment of VAT.

Travel and Transport

Freight transport destined to or coming from countries outside the European Union have a 0 percent VAT tax rate. Passenger transport in a vehicle that has a passenger capacity for less than 10 passengers; shipbuilding; and the sales or hiring out of helicopters, airplanes and houseboats are exempt from VAT.

Books and Printed Matter

The printing, publication and sales of books, magazines, newspapers, pamphlets, leaflets, maps and other printed matter have a 0 percent VAT rate.

Exports

When goods are exported from the United Kingdom to a country located outside the European Union, they are normally free from VAT. In addition, when goods are exported from the United Kingdom to another European Union country to a company with a current VAT registration number, the VAT rate is 0 percent. However, in this case, additional requirements such as removing the goods from the United Kingdom within three months of the order must be met as well.

References

• HM Revenue & Customs: Rates of VAT on Different Goods and Services
• NVK Group: VAT Exempt Items