VAT rates
VAT is collected on business transactions, imports and acquisitions.
There are three rates of VAT in the UK:
- Standard Rate 20%
- Reduced Rate 5%
- Zero Rate 0%
When the University makes supplies of goods and services where any of the above three rates are applicable, then input VAT incurred on the associated costs can be recovered in full.
In addition some supplies are exempt from VAT, such as education, while others fall ‘outside the scope of VAT’.
Standard rated supplies
Most supplies of goods and services are standard rated. Supplies that are exempt or subject to a reduced or zero rate are specified in law. In some cases the lower rate or exemption is applied automatically and in others the University will need to make a request to the supplier. These are marked *
Reduced rate Supplies
- Residential fuel or power*
- Installation of energy saving materials
- Grant funded installation of security goods, gas supplies and heating equipment*
- Residential renovations and alterations
- Residential conversions
- Women’s sanitary products
Last year the government announced a temporary reduction in the rate of VAT from 20% to 5% for supplies of accommodation, eat in and takeaway food and entrance to visitor attractions in response to the coronavirus (COVID-19) pandemic.
The original rate reduction applied 15 July 2020 until 30 September 2021. From 1 October 2021 until 31 March 2022 the reduced rate has been increased to 12.5%, after which it will revert to the old rate of 20%.
The University finance system has been updated to reflect these changes.
Zero Rated Supplies
Zero rated supplies are taxable but have a VAT rate of zero. VAT on inputs can be recovered in full.
- Food (excluding catering)
- Sewerage services and water
- Books, including e-books
- Talking books for the blind and disabled, and wireless sets for the blind
- Construction of buildings
- Protected buildings
- International services
- Transport
- Drugs, medicines, aids for the disabled*
- Imports, exports
- Advertising by charities*
Exempt Supplies
No VAT is chargeable on an exempt supply, and, as a rule input VAT cannot be recovered on expenditure. Partial exemption provisions allow the University to reclaim a small portion of the input VAT. This is accounted for centrally.
- Land
- Education
- Health and welfare
- Subscriptions to trade unions, professional and other interest bodies
- Sport, sports competitions and physical education
- Fund-raising events by charities and other qualifying bodies such as a University
- Cultural services
Supplies ‘outside the scope of VAT’
Supplies are ‘outside the scope of VAT’ when they are:
- Not made in the course of business
- Made outside the UK (special rules exist for some international services)
- Made by someone who is not a taxable person.
Examples of such supplies include:
- Businesses below the VAT taxable turnover threshold for registration, currently £85,000 (2018-19)
- Supplies made outside the EU
- Supplies within the EU
- Suppliers made within one VAT registration. This includes charges between the University and ßÏßÏÊÓƵ Estates and Facilities (SEF), both of which are part of the University group VAT registration.
- Grants, donations or contributions where the person giving receives no benefit in return
- Grant funded research.