Is fee income of a private nursery zero rated or exempt.
If exempt is there any way input tax for leasehold alterations and capital equipment can be reclaimed ?
john rees
Replies (12)
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Exempt supplies
Nurseries provision is always an exempt supply for VAT purposes (it's considered education). That means no VAT is charged nor is reclaimable on any expenditure relating to that provision.
If the business has no other income that is taxable (ie, sales of food or drinks, books and posters, etc) then I'll assume the business is 100% fully exempt. No VAT recovery can take place on any expenditure be it capital or revenue based.
If it has some taxable income then it may need a partial exemption calculation to determine what % of the overall expenditure can be recoverable - but unless they make more on books than they do on nursery fees (unlikely) then % will be very small overall.
Some alterations may attract the lower rate of VAT of 5% depending upon whether the business is a charity and if the building is listed. Certain items may attract the zero rate such as wall insulation - but depends upon the kind of works taking place. Capital items will invariably be standard rated unless specialist equipment for specific disabled person, unlikely to achieve zero rating. If fully exempt, I'd aim to achieve a landlord maintained lease so as to avoid future VAT costs. Does the landlord charge VAT on the rent?
My only worry is that you're asking if nursery income is zero rated or not and if input tax can be reclaimed - which suggests the business doesn't know already.
Q1. How has it been treating the charges for nursery care so far?. There's a BIG difference between exempt and zero rating.
Q2. Is it VAT registered or intending to register for VAT?. If 100% exempt HMRC will not permit the registration anyway.
Q3. Are there any other activities taking place for which a charge is made and if so, what are the activities (book sales, etc).
John has been asked to completely refurbish commercial premises and turn them into a children's nursery. John is VAT registered. Does he charge VAT on this work which is expected to be on a labour only basis.
John creates a query of his own rather than adding to a 10 year old query that is only vaguely related.
Not sure what you are getting at here as I have never posted before. I have asked a simple question and have no idea what a 10 year old query has to do with anything. Please elaborate. Thank you. Bob
John appoints someone who knows Bob from Adam and knows how to post a question on a forum.
John is [***] - poor john.
Given that I have never used the forum before I am not sure how to take your response which is far from helpful to my genuine query.
Mate, if you want to ask a question, ask a question. What you have done is added an answer to a 10 year old question. Instead of getting uppity just take a couple of minutes to think it through.
See that massive yellow box at the top of the page that says, Ask Your Question Now? Click on it and ask away.
John I hope you get a civilised answer about your nursery query because I asked a question a few months back about a nursery and all I got was smart remarks from a load of supercilious know-it-all [***]. I had never been on the forum before and because I was not aware how to go about presenting a query I was subject to abuse from idiots who should have known better. I wish you good luck in your quest for a reply. Bob