VAT is a tax that’s charged on most business transactions in the UK. Businesses add VAT to the price they charge when they provide goods and services to:
If you’re a VAT-registered business, in most cases you:
- charge VAT on the goods and services you provide
- reclaim the VAT you pay when you buy goods and services for your business
- If you’re not VAT-registered then you can’t reclaim the VAT you pay when you purchase goods and services.
When you will need to register VAT?
- your turnover for the previous 12 months has gone over a specific limit – called the ‘VAT threshold’ (currently £81,000)
- you think your turnover will soon go over this limit
|Rate||% of VAT||What the rate applies to|
|Standard||20%||Most goods and services|
|Reduced rate||5%||Some goods and services, eg children’s car seats and home energy|
|Zero rate||0%||Zero-rated goods and services, eg most food and children’s clothes|
|VAT registration||More than £81,000|
|Registration for distance selling into the UK||More than £70,000|
|Registration for bringing goods into the UK from the EU||More than £81,000|
|Completing simplified EC Sales List||£72,500 or less and supplies to EU countries of £11,000 or less|