VAT Rates - Zero rated

Zero Rated Goods and Services (VAT Rate = 0%)

If you have just read, exempt goods you may well be asking why have two names for the same concept. As the name suggests, VAT is charged at 0% on zero rated goods and services. Output VAT is £0. The customer invoice will have £0 VAT.

Just in case you think you are losing the plot,  the difference between zero rated and exempt is that zero rated goods and services are subject to 0% VAT where as exempt are not included in the VAT system.  The input VAT in producing the zero rated good or service might well not be £0. In the subsequent VAT return, you can claim back input VAT on expenses used to produce the zero rated good. That is not the case for exempt goods.

One big area for zero rated goods are where those goods are exported (and not subsequently re-imported or re-processed). The full list from HMRC is explained HMRC zero rated. As with all the exceptions to the simple cases, please seek VAT advice as this might be significant to your business.