VAT

VAT is, one of the most common taxes and is a tax on consumer expenditure. It is also collected on business transactions, imports and acquisitions and unless you are VAT registered yourself you cannot avoid paying this additional tax. There are three different levels of VAT, but the most commonly charged is 17.5%. The other two are zero rated and lower rated (5%).

With some notable exceptions, VAT is payable if the goods and services are:

* supplies made in the United Kingdom (UK) or the Isle of Man
* by a taxable person
* in the course of a business
* are not specifically exempted or zero-rated.

To become VAT registered, your firm’s turnover must exceed £61,000 a year, although this figure is likely to increase each year.
These increases have been aimed at helping new businesses that cannot deal with the burden of filling out continual VAT forms. However, you can often save significant amounts of money if you register for it as you can claim back the VAT you pay on any goods and services you purchase. Therefore a number of businesses voluntarily put their name forward even if they are under the threshold.

The following items are rated at the lower rate of VAT:

  • domestic fuel or power
  • installation of energy saving materials
  • grant funded installation of heating equipment or security goods or connection of gas supply
  • renovation and alteration of dwellings
  • residential conversions
  • women’s sanitary products
  • children’s car seats.

The following items are zero rated:

  • food
  • books, newspapers and magazines
  • children’s clothes
  • special exempt items – for example equipment for disabled people

You can find a complete list of zero rated goods here

Advertisements

I'm always interested in what people think and love having a debate so why don't we have a chat :-)

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s