Value added tax

Registered businesses charge Value Added Tax (VAT) on their sales. This is known as output VAT and the sales are referred to as outputs.

Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT.

There are three rates: standard which applies to most goods and services, reduced rate for some goods and services such as home energy and zero rate goods and services, for example, most food and children's clothes.

Some supplies are exempt from VAT for example postage stamps, financial and insurance transactions.

A business is required to register for VAT if the value of taxable supplies exceeds the annual registration limit.

The government has frozen the VAT registration and deregistration limits for two years from 1 April 2018.

Rates

Standard: 20% (unchanged from 2017/18)

Reduced: 5% (unchanged from 2017/18)

Limits

Annual Registration Limit (1.4.18 to 31.3.19): £85,000 (unchanged from 2017/18)

Annual Deregistration Limit (1.4.18 to 31.3.19): £83,000 (unchanged from 2017/18)

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Registered Office: Nagle James Associates Ltd, Amba House, 4th Floor, Kings Suite, 15 College Road, Harrow, Middlesex HA1 1BA
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Nagle James Financial Planning Limited, Chartered Accountants and business advisors, is regulated by The Financial Conducts Authority No. 182101; incorporated in England and Wales No 4182798.
Registered office: Nagle James Associates Ltd, Amba House, 4th Floor, Kings Suite, 15 College Road, Harrow, Middlesex HA1 1BA