Charges for subscriptions to an organisation are normally standard rated. However, if little or nothing is given in return for a subscription it may be possible for it to be classed as a donation.

Some supplies made to members by certain non-profit-making public interest bodies in return for a subscription can be exempt from VAT. These are bodies with aims that are in the public domain and are of a political, religious, patriotic, philosophical, philanthropic or civic nature. Qualifying supplies made by such bodies are exempt except those which include:

• any supplies that are not referable to the aims of the organisation as set out in its articles of association
• the right of admission to any premises, event or performance for which non-members have to pay, or
• any supplies that are not available without payment other than a membership subscription, that is, which are not provided automatically as part of the membership benefits and for which an additional sum is charged.

There is also a special concession for the VAT treatment of membership subscriptions by charities whether or not their supplies are exempt. Normally, there is one “principal benefit” within a package of benefits to which all the other benefits are supplementary or incidental. In such cases the package would be treated as a “single supply” for VAT purposes with the VAT treatment of the additional benefits following that of the principal benefit.

For example, if the principal benefit offered by a theatre club is theatre seats and the other benefits – such as the right to receive a theatre magazine (zero rated) – are incidental, the whole supply would be treated as a supply of admission, which would be standard-rated or exempt depending on whether or not the exemption for cultural activities applied.

However, charities and non-profit-making organisations can choose to treat packages of membership benefits as “multiple supplies”. This means that they can apportion the VAT treatment of each benefit individually. In the example above it means that they could benefit from being able to treat the supply of the theatre magazine as zero rated.

For further information see HMRC VAT Notice 701/5: clubs and associations