Introduction to VAT in the United Kingdom

Value Added Tax (VAT) is a tax on goods and services consumed in the United Kingdom.

VAT is a consumption tax that applies to the value added to products and services throughout the supply chain.

In the UK, there are three main VAT rates: Standard (20%), Reduced (5%), and Zero (0%).

There are also products and services that are Exempt.

Who Should Register for VAT?

Companies with an annual turnover exceeding £85,000 must register for VAT.

Some e-commerce platforms require businesses to be VAT registered.

Benefits of Being Registered

*Registration brings credibility

*Allows for the recovery of VAT on purchases

* Maintaining up to date records will provide better information for running your business

* You can claim VAT on certain items that you purchased prior to the date of VAT registration.

VAT Accounting

*VAT registration brings extra costs and administrative burden.

*Maintaining organized and accurate records is crucial for meeting tax obligations and avoiding issues with HMRC.

* All VAT registered businesses must submit returns through Making Tax Digital for VAT.

That means business needs to purchase compatible software to keep VAT records and file VAT Returns to HMRC.

Consult the Experts at iaccounting Services

For a deeper understanding and specific guidance on VAT in the UK, we recommend consulting the qualified professionals at iaccounting Service. We are here to help ensure your company is compliant and maximizes the benefits of the British tax system. Contact us today for personalised assistance.