The term 'taxable supply' is deliberately broad: it captures standard-rated supplies (most goods and services, taxed at 5%), zero-rated supplies (exports, certain healthcare, education, and residential property — taxed at 0% but still reportable), and excludes exempt supplies (which fall entirely outside the VAT system). The distinction between zero-rated and exempt matters enormously: a business making zero-rated supplies can reclaim input VAT; a business making exempt supplies cannot. If your business mixes taxable and exempt supplies, a partial exemption calculation determines how much input VAT you can recover.
See also: VAT Exemption, Zero-Rated Supply, Output VAT, Input VAT
