Apart from a few exceptions most goods or services have Value Added Tax (VAT) levied on them, VAT exceptions are services such as insurance, education and training loans. Tax Consultants quick guide will give you the basics, speak to an authorised tax consultant or accountant for advice about your individual business circumstances.

VAT rates in UK

Currently there are three rates of VAT in the UK :

Standard Rate 17.5%

Reduced Rate 5%

Zero Rate 0%

In the UK if you run a business or are self employed you must register for VAT if your taxable turnover is ₤55,000 per financial year or greater; however, you can register for VAT if your taxable turnover is below this limit.

If you think that your taxable turnover may be near to the ₤55,000 it will probably be a good idea to register for VAT as companies who exceed the limit and haven't registered could be fined.

VAT advice and help line

VAT is managed and controlled in UK by HM Customs & Excise they have an advice line that you can call 0845 010 9000. Your accountant will also be able to answer your VAT related questions.

How Much VAT do I have to Pay?

The calculation for VAT is quite straightforward, the products or services that your business supplies are known as “taxable supplies”, if you are registered for VAT your business must charge VAT on all taxable supplies.

The amount of VAT that your business will have to pay is the difference between you output tax and input tax.

Output Tax

Output tax is the VAT you have to charge your VAT registered customers.

Input Tax

Input tax is the VAT that has been charged to you by your suppliers

To calculate the amount of tax that your business owes Customs & Excise deduct your input tax from your output tax. In a case where your input tax is higher than your output tax you may be due a VAT refund.

Should I register if my taxable turnover is less than ₤55,000?

Even though your taxable turnover is below the mandatory limit you may be able to complete a voluntary registration for VAT.

There are advantages and disadvantages to voluntary registration for VAT, Tax Consultants Guide always recommend seeking the advice of an authorised tax consultant.

HM Customs & Excise state that a primary benefit of voluntary VAT registration is the increased credibility that it can give to your business, also should your business be producing zero rated taxable supplies you may benefit from claiming input tax.

After you register for VAT

Many businesses can get into difficulties with VAT account management, it can become complex and put heavy demands on your time, you have to manage a complete record for you VAT account, you will need to account for all output tax and taxable supplies and send your VAT return to Customs and Excise on time.

HM Customs & Excise Helpline: 0845 010 9000

Tax Consultants Guide 2004

The tax and financial consultants guide

The material provided by Tax Consultants Guide is for general information only and does not constitute investment, tax, legal or other forms of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.