Exempt from VAT examples include which of the following?

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Study for the AAT Level 2 Introduction to Bookkeeping Test. Prepare with interactive flashcards and multiple-choice questions. Each question includes detailed hints and explanations to boost your confidence and knowledge. Get ready to ace your exam!

Multiple Choice

Exempt from VAT examples include which of the following?

Explanation:
Exempt from VAT means you don’t charge VAT on the sale and you can’t reclaim the VAT you incur on related purchases. Insurance is an exempt supply because financial services are treated as exempt, and postal services are exempt as they fall under a public service. Food and accommodation aren’t exempt: most food is zero‑rated or standard‑rated depending on the item, and accommodation is typically standard‑rated. So the two clear examples of exempt supplies are insurance and postal services.

Exempt from VAT means you don’t charge VAT on the sale and you can’t reclaim the VAT you incur on related purchases. Insurance is an exempt supply because financial services are treated as exempt, and postal services are exempt as they fall under a public service. Food and accommodation aren’t exempt: most food is zero‑rated or standard‑rated depending on the item, and accommodation is typically standard‑rated. So the two clear examples of exempt supplies are insurance and postal services.

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