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VAT is a widespread form of tax that is used in most countries around the world. It is charged as a levy on the purchase of various types of supplies of goods and services, which are assigned to different tax rates. One country that is popular among them is the United Kingdom. How is VAT accounted for in this country? This topic deserves more attention.
VAT rates in the UK
In the UK, the national tax authority is HMRC, or His Majesty’s Revenue & Customs. How much is VAT in UK? The following basic VAT rates apply: a standard VAT rate of 20%, a reduced VAT rate of 5% and a zero VAT rate of 0%. In addition, the UK government can temporarily introduce additional rates when the need arises. The standard rate of VAT applies to most goods and services. Other groups are assigned specific groups of goods, for example, a reduced VAT rate applies to fuel and electricity for home heating, as well as medical services.
Temporary VAT rates
Temporary VAT rates can be in the form of a completely new VAT rate, for example 12.5%, or in the form of a temporary transfer of certain products to another rate category. This usually applies for a strictly defined period of time, after which the rates revert to their previous state. As a result, when doing business in the UK, it is important to constantly review the tax changes that are being made and optimize your income and costs based on these.
VAT number in the UK and Northern Ireland
The VAT number In the UK consists of a country code, or GB symbol, and nine digits. If the company is located in Northern Ireland and transactions are made with customers in EU countries, the symbol XI will appear in the VAT number instead of GB.
Obligation to register for VAT
The topic of how much is VAT in UK is also linked to the tax threshold above which registration for VAT is required. In 2023, for UK-based businesses, the VAT threshold was £85,000 turnover in 12 months. In 2024, the value is £90,000. Once this figure is exceeded, you must register for VAT purposes. Registration can also be done voluntarily, even if the stated turnover figure is not exceeded.
Digital VAT registration
Digital tax records are required to be kept in the UK. This means that tax returns must be submitted using appropriate computer software. VAT can be paid via online banking, debit card or credit card, or directly at your bank. It is possible to use direct debits and standing orders, by which dues are paid. Returns must be submitted on a quarterly or annual basis.
Getting help at the tax office
The tax system in the UK has been subject to frequent changes in recent years. For this reason, many entrepreneurs use the services of tax offices, which allow them to run their business in compliance without the need to constantly review the tax law. One of the recommended is INTERTAX, a company with many years of experience whose staff guarantee a high quality service. As a result, entrepreneurs can focus on developing their business and can be sure that their activities will not result in unexpected additional costs charged by the tax authorities.
