Jurisdiction(s):
United Kingdom

Key definition

Charity definition

What does Charity mean? In practice, a charity is an organisation established solely for charitable purposes to deliver public benefit, with assets held for those purposes and supervised by the courts and charity regulators. Common forms include a trust, unincorporated association or company limited by guarantee (including CIO/SCIO). Surpluses cannot be distributed to members; funds must be applied to the purposes. Political activity is permitted only as ancillary. Status determines regulatory duties and eligibility for charity tax reliefs. England and Wales: Charities Act 2011, s 1, defines a charity as an institution established for charitable purposes only and subject to High Court control;...

UK VAT: Zero-rating for first grants by persons constructing relevant charitable purpose (RCP) buildings—conditions, certification, construction scope, input tax and change-of-use/self-supply

Published by a LexisNexis Tax expert

Practice notes

This Practice Note addresses the zero rate of VAT available to developers who sell or grant leases of specific buildings they have built, where the property is designed for charitable use. Such properties are termed buildings for a relevant charitable purpose (RCP). This Practice Note contains citations to case law of the EU Court of Justice. For advice on whether rulings of the Court of Justice bind the UK courts, see Practice Note: Assimilated law—Assimilated case law. For commentary on assimilated law (previously retained EU law) and tax more broadly, including the bespoke approach now applied to VAT legislation, see Practice Note: Assimilated law and tax. The Court of Justice decisions cited in this Practice Note were issued before the end of the implementation period (which the UK entered on 31 January 2020 and which concluded at 11 pm on 31 December 2020).

Why does zero-rating matter?

If the zero rate is unavailable, the supply will ordinarily be exempt, with the result that the developer cannot reclaim VAT (ie input tax) on related costs—for example, the construction of the building, professional fees and potentially the purchase of the site...

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Martin Scammell

Martin Scammell is an independent VAT consultant, specialising in property and construction matters, who works with tax departments in major corporates and universities, and with a number of law and accountancy firms. He is the author of the leading reference work on VAT and property.Martin started out in VAT Policy in Customs & Excise, was a Partner at Ernst & Young, where he headed up the VAT real estate group, and then became head of indirect tax at Eversheds.He has been involved in the development of VAT legislation and policy over many years, and regularly serves on working parties established by HMRC. He was a member of the Office of Tax Simplification’s consultative committee for their review of VAT in 2017, and in 2018-19 of HMRC’s external stakeholder group considering the proposed reverse charge for building work. Martin currently works with HMRC as...

Web page updated on 22/05/2026

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