Explanation of Goods and Services that Qualify for Zero-Rate VAT

Goods and services are necessities of life. Among other professions, traders or businessmen are associated with the business of providing goods as services to people in a city, country, or around the globe, for example, multinational companies. Are you doing a goods and services business but unaware of the tax liabilities imposed by the UK? This article provides all the necessary information and explanations of goods and services that qualify for zero-rate VAT (value-added tax).

 

Explanation of Goods and Services

Goods and services are two different necessities of life that are provided by various companies and businesses. Goods are the products that are needed for maintaining lifestyles, whereas services are the actions that are performed by companies for their clients. Goods are physical items such as cars, books, pens, food items, furniture, etc.

Services are the actions that are done for clients by different professionals or companies, such as haircuts done by a barber, which are services, and the internet provided by a company, which is a service. The goods and services in the UK include the items and products it imports and exports and the professionals it sends to other territories or hires individuals to perform certain services in the UK, like healthcare professionals.

Exports, Services by the UK and VAT

The list of goods and services exported by the UK worldwide are

• Motor vehicles: The UK manufactures and exports motor vehicles and exports them worldwide.
• Pharmaceuticals: It is one of the biggest industries in the UK, and the UK is one of the biggest exporters of medicines and other pharmaceutical items worldwide. A major proportion of revenue in the UK is generated by pharmaceutical exports.
• Precious metals: The precious metals industry in the UK is mainly concerned with refining precious metals like gold, silver, palladium, and platinum. London is considered the hub of precious metals refinement and export to the rest of the world. The London Bullion Market Association, through its transparent system, makes London prominent in this industry.
• Petroleum: This is one of the prominent industries in the UK; however, the extraction of oil and gas in the UK has been declining over the past two decades due to old oil fields drying up. However, the small businesses in this industry are contributing to the discovery of new oil fields.

Services by the United Kingdom

Below is the list of services provided by the UK to the rest of the world:

• Financial services: The estimated revenue of financial services contributed to the UK is £98.0 billion.
• Other business services: The estimated amount contributed to the revenue of the UK by other business services is £161.3 billion.
• Travel services: The travel services are estimated to contribute £64.4 billion to the UK’s revenue.
• Telecom, computer, and information services: These services contribute an estimated amount of £43.6 billion.
• Transport services: Transport services provided by the UK are estimated to be an amount of £31.5 billion to the revenue of the UK.

Goods and Services with Zero VAT

The HMRC has defined certain categories of goods and services that qualify for zero-rate VAT. These goods and services are listed below:

• Food and drinks for human consumption, animal feed, plants, and seeds are imposed zero VAT, such as catering, confectionery, snacks, ice creams, hot takeaways, and hot food.
• Sport, leisure, culture, and antiques are also exempted from VAT. This includes items and services such as physical education and sports activities, betting and gaming, bingo, and lottery tickets. Visits to museums and cultural exhibitions are exempted from VAT. Antiques and works of art are exempted from VAT.
• Health, education, welfare, and charities are exempted from VAT. This includes goods given to charity, construction and sale of buildings for charity, charity shops, and charitable funding. Buildings and services for especially abled people and equipment given to them are exempted from VAT.
• Health services are also exempted from VAT, such as incontinence products, maternity pads, sanitary materials, and low vision aids.
• Education and vocational training and sessions provided are exempted from VAT. Materials and costs are also exempted.
• Energy-saving services are also at 0% VAT, such as water supplied to households, air source heat pumps, sewage services, broilers, and insulations.

 

Conclusion

Explanations of goods and services that qualify for zero-rate VAT are defined on UK government websites. There are various categories of life where the products and services are at 0% VAT, such as buildings, utilities, food, and energy-saving materials. Charity is also included in the 0% VAT, encouraging UK citizens to give more to charity for the benefit of deserving people.

Disclaimer: All the information provided in this article on goods and services that qualify for zero-rate VAT, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.