Products that do not include Value Added Tax (VAT) typically fall into two categories: zero-rated (taxed at 0%) or VAT-exempt (not subject to VAT). Common examples include most food (excluding catering/hot food), books, newspapers, children's clothing, prescription medicines, public transport, and services like education, healthcare, and insurance.
When not to charge VAT
Healthcare: Medical services, hospital care, and the supply of certain medical products may also be exempt from VAT. Financial services: Many financial services, like insurance and banking, are VAT-exempt. Charitable activities: Donations and activities carried out by registered charities may be exempt from VAT.
If something is exempt from VAT, it's usually because the product is considered to be an essential good or service. HMRC has a full list of VAT-exempt products, but some of the main goods and services that are exempt from VAT include: Sporting activities and physical education. Education and training.
Common Types of VAT Exempted Supplies
Many goods and services are exempt from VAT. But there are often items within a goods or services category for which VAT is chargeable. For example, food and drink is generally zero-rated for VAT. Exceptions to this include hot food, crisps, alcoholic drinks, confectionery and soft drinks.
To get the product VAT free your disability has to qualify. For VAT purposes, you're disabled or have a long-term illness if: you have a physical or mental impairment that affects your ability to carry out everyday activities, for example blindness. you have a condition that's treated as chronic sickness, like diabetes.
What items are eligible for a VAT refund? Typical Recoverable Expenses are:
Agricultural products, tuition fees, lending operations, real estate, books, transportation and other necessities are typically VAT-exempt transactions.
Common examples of zero-rated sales include basic groceries, prescription drugs, and certain medical devices. Understanding zero-rated sales is essential for both consumers and businesses, as it affects pricing and tax obligations.
Certain goods and services must be exempt from VAT (for example, postal services, medical care, lending, insurance, betting), and certain other items are exempt from VAT by default, but states may opt to charge VAT on them (such as land and certain financial services).
You cannot reclaim VAT for: anything that's only for personal use. goods and services your business uses to make VAT -exempt supplies. the cost of entertaining or providing hospitality to people you do business with (for example theatre or sports tickets)
Frequently asked questions
What is Zero Rating? By zero rating it is meant that the entire value chain of the supply is exempt from tax. This means that in case of zero rating, not only is the output exempt from payment of tax, there is no bar on taking/availing credit of taxes paid on the input side for making/providing the output supply.
Navigating VAT obligations can be particularly complex for online businesses, especially those selling across borders. Common mistakes—such as failing to register in the correct countries, applying the wrong VAT rates, or missing important filing deadlines—can lead to serious financial and legal consequences.
Costs that are out of scope for VAT are outside the remit of the UK VAT system, which means that VAT doesn't apply to them. Examples include: government-imposed tolls, such as MOT certificates, council tax and business rates. staff wages and pensions.
Exempt goods and services
There are some goods and services on which VAT is not charged, including: insurance, finance and credit. education and training. fundraising events by charities.
So it's usually high-ticket items, like jewelry or fine clothing, that qualify for a VAT refund, not a paperback novel or suntan lotion. There are also a number of goods and services that are not eligible for refunds, including hotel rooms and meals.
Apply for a VAT refund
Goods and services exempted from VAT are: