What is VAT exempt?

Updated on June 7, 2022

Definition of a VAT exempt

Vat is not charged on all sales, but in some cases, it is. What this means is that both customers and suppliers will not have to pay VAT on these goods and services, and there will be no way to claim back VAT if you purchase them.

Any costs you incur when making exempt sales are not eligible for VAT return. Accountancy fees charged by a doctor’s office, for example, cannot be deducted from a doctor’s practice’s VAT refund.

To register for VAT, you must have a firm that sells goods and services that are not subject to VAT.

Don’t get the terms “VAT exempt sales” and “VAT zero-rated sales” mixed up. A zero-rated sale is a VATable sale having a zero percent VAT rate

Examples of VAT exempt goods and services

VAT is not charged on many medical supplies and services. Similarly, postal services are exempt from VAT, so you don’t have to pay any when you buy a stamp book.

Find out more about the different rates of VAT in our dedicated guide.

Disclaimer: The information in this dictionary is based on the best of our knowledge of current tax legislation. In any case, don’t rely on it. It could be out-of-date or irrelevant to your specific situation. If you have any questions regarding the terms defined in this glossary, you should consult an attorney or accountant. FreeAgent Practice Partners are available in your area if you don’t already have an accountant.