Commentary

V7.326 Exemption—introduction

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.326 Exemption—introduction

Part V7 Tax planning | Commentary

Exempt outputs

V7.326 Exemption—introduction

In general terms, a supply or source of income can be allocated to one of five different categories:

  1.  

    •     a standard-rated supply – currently 20%

  2.  

    •     a reduced-rated supply – currently 5%

  3.  

    •     a zero-rated supply – 0%. The zero-rate means that a business can still reclaim input tax on its expenses (subject to normal rules) but does not have to account for output tax on it sales

  4.  

    •     an exempt supply – a business does not charge VAT on an exempt supply, but a business that only makes exempt supplies cannot register for VAT

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