Guest post by Les Howard of

There are six VAT exempt ‘Groups’ which specifically apply to the charitable sector. Each has its nuances. 

Advisers must understand that exemption depends on two factors: firstly, the nature of the services being supplied; and secondly, the non-profit status of the provider.

I have listed in the table below the six exempt Groups that we come across in the charitable sector. There is substantial guidance on the HMRC website on each. There is also commercially available guidance. We use Tolley material which is very good. 

I would not expect anyone to read every piece of material on all six of these Groups, but I recommend you do to gain a good understanding of what is relevant and important to your clients. Download the guidance in pdf format if you can. Find some training or talk to me! 

A word about ‘eligible body’ status

The precise wording for an eligible body varies amongst the exempt Groups. So do not assume that your charity will automatically qualify! In some cases, however, it is not in your interest to be an eligible body. You may prefer your activities to be taxable rather than exempt. This is quite common where your activities are wholly or mainly funded by local authorities, or where your customers are predominantly commercial organisations.

Our practice, whether the charity client prefers its supplies to be taxable or exempt, is to review the Constitution or Memorandum & Articles, and other governing documents and make recommendations accordingly.


Welfare services fall into one of three categories:

  • Care or treatment or instruction designed to promote a person’s physical or mental welfare. This is different to medical treatment, but requires the recipient to have a clear ‘need,’ whether that be physical or mental.
  • Care or protection of children and young people.
  • Spiritual welfare, such as a course of instruction or a retreat.

In each case, to qualify for the exemption, supplies must be made by a charity or a ‘state-regulated’ provider, for example, a CQC-inspected corporate entity.

Membership subscription 

Subscriptions to a range of membership organisations falls into several categories:

  • Professional associations. Such organisations have membership restricted to persons in a specific profession or seeking qualification for that profession.
  • Learned societies. Such an organisation either advances a particular branch of knowledge or professional expertise.
  • Representational trade associations. Fairly self-explanatory, where membership is restricted to businesses or individuals whose professional interests are represented and promoted by the organisation.
  • Public interest bodies. This is a ‘catch all’ category, which includes political, religious, patriotic, philosophical, philanthropic or civic organisations.
  • Organisations that are made up of other qualifying organisations

In each case, the organisation is required to be a non-profit. Many such organisations operate trading subsidiaries, which fall outside of the exemption. Where the parent organisation runs a conference or exhibition, care must be taken as to whether the event can be covered by the exemption. It may be that the education exemption applies to delegate fees, for example.

Fundraising events

This is easily defined! Where a charity, or its trading subsidiary, arranges an event where the primary intention is to generate funds for the charity: the income generated is exempt from VAT.


Education falling within the exemption is much wider than school or university education. It includes any course of instruction, even where it leads to no recognised qualification. The courses may be delivered by different media.

Education is exempt only when delivered by an eligible body. This includes schools and universities and colleges. Beyond that, an eligible body has to be a non-profit AND has to ring-fence surpluses generated from supplies of education so that are reinvested for the continuance or improvement of such supplies. This has to be clear in the governing document and operated in practice.


The definition of sport includes physical recreation and is pretty broad. 

Eligible body status depends on three factors:

  • The organisation is a non-profit;
  • The organisation ring-fences any surpluses for the continuance or improvement of sports activities; and
  • The organisation must not be ‘subject to commercial influence.’ This is an anti-avoidance provision designed to prevent a person from siphoning off profits from the organisation. For example, rent paid to a landlord, or a management charge paid to an influential person or controlling business.

Cultural services

This Group exempts the supply of a right of admission to:

  •  a museum, gallery, art exhibition, zoo; or 
  • a theatrical or musical or choreographic performance which is cultural.

Again, the non-profit requirement is a significant issue here. This depends on the organisation meeting three tests:

  • it is a non-profit;
  • it ring-fences any surpluses for the continuance or improvement of cultural activities; and
  • it operates on an essentially voluntary basis. The important detail is that no key decision maker can have a financial interest in the success of the organisation. For example, if an artistic director is salaried AND a Board member, the organisation will fail this test.

Table of exempt groups:

TitleLegislation (VAT Act 1994, Sch 9)HMRC NoticeHMRC Internal guidance
WelfareGroup 7, Item 9701/2VATWELF1010
Membership organizationGroup 9, Item 1701/5, chapters 11 & 12VTUPB1000
Fundraising eventsGroup 12, Item 1, Notes 2 & 3701/1, para 5.2.2VCHAR9100
EducationGroup 6, Note 1(e)701/30VATEDU35000
SportsGroup 10, Note 2A & 2B701/45VSPORT1000
Cultural servicesGroup 13, Note 2701/47VCULTURE1100

You will appreciate that this guidance is merely an introduction to a potentially complex area of tax. Professional advice is always recommended.

You can find out more about Les Howard and connect with him here via LinkedIn

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