VAT-exempt invoice templates
An invoice template without VAT? Is that even possible? It is, in fact. And it’s an important option to have if you’re working with invoice software or if you’re creating your own invoices from an invoice template in Excel or Word.
For sole traders and small business owners, the need to ensure you’re following all of the necessary VAT, invoicing, and legal regulations can start to get overwhelming. Understanding whether your business is fully or partially VAT-exempt can certainly make things a bit easier from the start.
How does VAT exemption work?
Depending on your business, the goods or services you provide could be VAT exempt. In the UK, there are a number of different goods and services that fall under the ‘exempt’ category.
What does this mean? It means that if your business deals with only these exempt products or services, you cannot be VAT-registered. In this case, you’ll need to get comfortable with a good invoice template that excludes VAT.
If your business only deals partially with a VAT exempt good or service, for example, if you purchase supplies that are not exempt. You can reclaim the tax that your company has had to pay, generally if it’s not exempt and falls under a certain amount.
Is your business VAT exempt?
If you’re in doubt, it’s best to check with the HMRC or your accountant. Types of goods and services that fall under the exempt category include:
Sporting activities
Membership fees for organisations
Fundraising events for charities
Education and training
Financial services
Letting, leasing and sale of commercial property
Is exempt the same as zero-rated?
Goods or services that fall under 0% VAT are considered ‘zero-rated’ and are not the same as VAT exempt. The two categories are similar in that no VAT is added to the sale price, however, zero-rated items or services are considered taxable but just at 0%.
For zero-rated goods, you can apply to be exempt from VAT if you deal only with this type of product or service, including supplies.
Zero-rated items and services include safety gear that meets current standards, such as helmets and protective boots, baby and children’s clothing, shops selling goods donated to charity, and more.
VAT exemption on your invoice template
So how do you handle VAT-exempt goods or services on your invoices? When creating an invoice, you must first make sure that you’ve removed or disabled the VAT rate option in your invoicing software. Simply applying 0% VAT to an item that’s actually VAT exempt isn’t correct.
For VAT-exempt businesses, the VAT line and calculation should be eliminated from the invoice. It’s also recommended that the seller includes a note stating that the goods or services provided are VAT-exempt, citing the applicable VAT Notice. An example of this could be: ‘Invoice is VAT exempt - VAT Notice 701/30.’
Send a VAT-exempt invoice with SumUp Invoices
The easiest way to send a VAT-exempt invoice is with invoicing software like SumUp Invoices, which comes with a simple, pre-built invoice template. You can create invoices and quotes for free.
With SumUp Invoices, you can choose whether or not to enable VAT in your profile settings. If you disable VAT, you’ll be able to send invoices that use a VAT-exempt invoice template.
You can then add the applicable VAT notice to your 'Terms' box. If you save this text as default, it will appear on all future invoices.