Some goods and services are exempt from VAT, such as insurance, training, and charitable fund-raising events.

If you sell VAT-exempt goods or services, your business is exempt. This means you can't register for VAT or reclaim any VAT on your business purchases.

If you're VAT-registered and use input VAT to make exempt supplies, you become partly exempt.

 NOTE: Input VAT is the VAT you pay on purchases, like on purchase invoices and bank payments. Output VAT is the VAT you charge on sales, such as sales invoices and bank receipts. 

This article only applies if you're using the Standard VAT scheme. If you're using the VAT Cash Accounting scheme, follow our alternative article.

Information

To qualify for this VAT scheme, you must meet all the conditions outlined in The Margin and Global Accounting Scheme (VAT Notice 718).

For example:

• Be registered for VAT
• Buy goods including VAT then sell or use them to generate VAT-exempt income

If you're using either a Partial Exemption Special Method or the standard method override applies, contact HMRC.

Next steps

Follow the steps in the set up and use the Partial Exemption VAT scheme article to set up the scheme and process your VAT return.