VAT (value added tax) is charged on most goods and services provided by VAT-registered businesses in the UK. It’s collected on be half of HMRC by businesses that are VAT registered. These same business can also claim VAT back on relevant purchases– we’ll get into this in a bit. Just a reminder that with our VAT calculator you can add or subtract VAT in few clicks.
Rates are subject to change and you must apply changes from the date they change – and not a day later.
Rates vary according to what you’re supplying, and there are four main categories to think about:
This now stands at 20% and applies to most goods and services – including webdesign services, electronics,consultancy, photography services and much, much more. This is the most common VAT rate, and if it applies to you then it’s the rate you should charge your customers for your goods and services.
This rate is 5%, and it’s charged on things like fuel and power used in homes and by charities, insulation, property renovations and alterations, as well as children’s car seats. If your goods or services fall into relevant categories, then this is the rate you will charge your customers.
This means that your goods and services are still VAT-taxable – so they still need to go on your VAT return – but the VAT rate you charge to your customers is 0%. Despite this, you still have record them in your VAT accounts and report them on your VAT return. Examples include food and drink for human consumption (except some items like alcohol, confectionery, and restaurant and takeaway meals, which are standard rate), plus children’s. shoes and clothing, books, newspapers, protective clothing, brochure printing and animal feed.
Some things are totally exempt from VAT, like postage stamps,and property transactions. Antiques and works of art, physical education and sports activities, also fall into this category. If you only supply exempt services, you can’t usually register for VAT.