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UK VAT in 60 seconds: A quick run-down of the key VAT facts

Ryan Bevan 10 March 2016 No comments


Some fun facts about VAT in the UK


A few statistics about VAT in the UK:

  • 15 million: Number of VAT registered businesses in the UK
  • £99.6 billion: UK VAT receipts collected by HMRC last year
  • 5: VAT revenue is 2.5 times higher than Corporate Income Tax revenue (£40bn) and 4 times higher than fuel duty (£27bn)


UK VAT Registration

  • You must become VAT registered if your taxable sales are above £82,000 (from 1st April 2015)
  • You can also voluntarily apply for VAT registration if taxable sales are under £82,000
  • Non-UK businesses making any taxable sales will automatically have to register for VAT
  • Non-UK businesses becoming UK VAT registered are known as Non Established Taxable Persons (NETPs)


UK VAT Returns

Since 2012, all UK VAT registered businesses are required to submit VAT Returns online via the HMRC online service (although there are some very unique exceptions).

Submissions can be made:

Monthly > 12 VAT Returns per Year (although permission from HMRC must be sought)

Quarterly > 4 VAT Returns per Year (this is the standard VAT accounting period)

Annually > 1 VAT Return per Year (although permission from HMRC must be sought)


The VAT Return form – VAT 100

There are 9 Boxes on the UK VAT Return, including:

  • VAT charged to customers
  • VAT to claim back on purchases
  • Net VAT payable/repayable to/from HMRC
  • Total sales and purchases made
  • Total amount of goods sold/purchased to/from customers/suppliers in other EU Countries


VAT Rates

There are 3 VAT Rates in the UK, plus VAT exempt status.

The 3 VAT rates are:


Standard Rate – 20%, including:

* Most goods and services


Reduced Rate – 5%, including:

* Domestic household utilities

* Health and sanitation products


Zero Rate – 0%, including:

* Printed materials e.g. books, magazines and newspapers

* Basic food and drink items

* Children’s clothes


Special VAT Accounting Schemes

There are 3 main VAT accounting schemes available to UK VAT registered businesses, namely:


Annual Accounting Scheme

A business can complete just one VAT Return each year and instalments of VAT are paid during the year, so the business is not faced with a large VAT bill at the end of the year.

Only businesses with expected taxable sales of £1,350,000 or less, excluding VAT, are eligible to join the scheme.


Cash Accounting Scheme

VAT on sales is accounted for on the basis of payments received from customers and VAT on purchases can only be reclaimed once payment has been made to the supplier.

Only businesses with expected taxable sales of £1,350,000 or less, excluding VAT, are eligible to join the scheme.


Flat Rate Scheme

A single flat-rate VAT percentage is applied to the VAT inclusive sales. This is payable to HMRC. VAT on purchases, imports or acquisitions is not recoverable.



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