What is VAT?

VAT
Value Added Tax (VAT) is a tax on certain goods and services. Only businesses that are VAT registered can charge VAT, but you are legally obliged to register once your turnover exceeds the VAT threshold, currently £83,000.

VAT is charged at three different rates: Standard rate VAT, Reduced rate VAT and Zero-rate VAT.

Most items carry the Standard rate of VAT, which is 20%. Goods and services that are classed as Reduced rate VAT include children’s car seats and domestic fuel or power. The Reduced rate of VAT is currently 5%.?

Zero-rated does not mean the service is not VAT taxable. It simply means the rate of VAT you charge is 0%. You still need to record zero-rated goods in your VAT accounts and on your VAT return. Zero-rated VAT goods include books, newspapers, most foods, children’s clothes and children’ shoes.

There are some goods and services that are exempt from VAT. These include postage stamps and property.

As a Numberworx customer you can access free unlimited advice and help on all aspects of VAT and VAT registration. Our bookkeepers are available without appointment via online chat, email or by phone.

Still unsure about VAT?

If you have any questions about VAT, the different rates of VAT or registering for VAT, we will be happy to help