VAT changes: good news for charities
Thursday, 11 February 2021
The change to zero-rated VAT on e-publications and the temporary reduced VAT rate available to tourism related supplies may benefit charities that charge for membership subscriptions.
Where a not-for-profit organisation charges its members for a membership subscription, it may take advantage of a concession offered by HMRC which allows them to apportion the VAT liability of the subscription between its component parts. For example, a charity subscription which offers adult members a t-shirt, a book and insurance may be split in accordance with values of the standard rate, zero rate and exempt elements of the VAT.
Many charities send out a printed newsletter or magazine as part of their membership package. The zero rate change in respect of electronic publications may present an opportunity to send these out electronically, saving printing/mailing costs, paying zero VAT on that element of the subscription and retaining the ability to recover input tax.
Temporary reduced VAT rate
The temporary reduced rate of VAT for tourism related supplies, which applies between 15 July 2020 and 31 March 2021, may also present an opportunity for charities to reduce the VAT due on subscriptions. Savings could be made where items such as admission to an event or an attraction, and goods and services available at catering establishments etc. have been included as part of a charge for a subscription.
If you would like to find out more about these VAT changes please contact a member of our VAT Team. You can find contact details on the Our People section of the MHA Larking Gowen website. Alternatively, call 0330 024 0888 or email email@example.com