What is VAT?
Value Added Tax (VAT) is a tax charged on the majority of goods and services provided by UK VAT registered businesses. Sometimes also referred to as ‘Very Awkward Tax’ it is also charged on goods and certain services imported from countries outside of the EU, and brought into the UK from other EU countries.
VAT registered businesses charge VAT when making a sale however are able to reclaim VAT they have paid when buying goods and services.
There are three current rates of VAT:
- Standard rate – 20%
- Reduced rate – 5%
- Zero rate – 0%
There are some goods and services which are exempt from VAT.
If a business provides goods and services which are subject to VAT (taxable supplies) and it’s turnover for the previous 12 months has exceeded the current VAT threshold of £73,000 it must register with HM Revenue & Customs (HMRC). Businesses not obliged to register can do so if they wish.
The Local Bookkeeper assists many customers with VAT queries and has helped many to register with HMRC. If you are unsure as to whether your business should be registered or you have any questions please do not hesitate to contact us.
Levi Rose is a resident of Wales, UK. She writes about The Local Accounts Department Service UKand is a resource for those looking for the pay as you go financial controller UK, pay as you go management accountant UK, Part time bookkeeper UK. She likes to read and work out in her free time.
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