VAT zero rate

Tax Comments Off on VAT zero rate

Due to EU legislation the UK is no longer able to add to the zero rate categories. The minimum VAT rate that can be applied to any new category is 5%.

Accordingly those items that can be treated as zero rated have been taxed at zero rate for some time. The main categories that are presently zero rated for VAT are listed below. Please note that this list is not exhaustive: 

Food – Most food products are zero rated for VAT purposes.

Clothing and footwear for children – Supplies of children’s clothing and footwear can usually be zero-rated where all the following conditions are met: the item must be an article of clothing or footwear, the item must not be made of fur, the item must be designed for young children, the item must only be suitable for young children. Most items of baby wear, such as bonnets, bootees and matinee jackets, can be clearly recognised as clothing, but less obvious items are also considered to be articles of clothing such as baby bibs and shawls.

Books etc – A significant number of  book related items are eligible for zero-rating including books, children’s painting and picture books, maps and charts, printed or copied music, booklets, brochures, pamphlets, leaflets, newspapers, journals and periodicals.

Land and property – The construction of a new building is usually subject to VAT at the standard rate. However the construction of the following type of buildings can usually be zero-rated: new domestic buildings, buildings for a charitable purpose, buildings for communal residential purposes.

Charity – The supply of certain charity related services are zero-rated: most advertising services and closely related goods are zero-rated when supplied to a charity, construction and sale of new buildings for a relevant charitable purpose, certain goods sold at charitable fundraising events, charity shops – selling donated goods.

Safety products – Cycle helmets – CE marked motorcycle helmets that meet safety standards, protective boots and helmets for industrial use. There are special rules for accessories such as visors, ear protectors or communication systems. If these items are included as an integral part of a qualifying helmet they can be zero-rated. Accessories supplied on their own are standard-rated.

Transport – The following transport related goods and services can usually be zero-rated providing all the necessary conditions are met: aircraft repair and maintenance, passenger transport in a vehicle, boat or aircraft that carries not less than ten passengers, helicopters – sale or charter, houseboats – sale or let out on hire, military aeroplanes – sale or charter, ship repairs and maintenance, shipbuilding – 15 tons or over gross tonnage.

Disabled – Equipment for blind or partially sighted people, dispensing of prescriptions by a registered pharmacist, incontinence products, low vision aids, talking books and vision aids for blind people, equipment for disabled people.

If you have any VAT queries, please give us a call.

Lesley Malkin, Audit Partner