Value Added Tax
You can only charge VAT on applicable products and service if registered for VAT. VAT rate types applicable for registered business operations products and services are:
Standard rate – currently 20%.
If you are registered for VAT, you have to charge VAT at the standard rate on all goods and services you supply, unless they fall into another category.
Reduced-rated – currently 5%
A reduced rate of VAT applies to some goods and services – including items such as domestic heating fuel and children’s car seats. Sometimes it only applies in certain circumstances, or it may depend on who the customer is.
Zero-rated – 0%. This is not the same as exempt or outside the scope of VAT
This means that goods and or service is taxable for VAT, but the VAT rate is 0.00%. Sometimes the reduced rate only applies in certain circumstances, or it may depend on who the customer is. It’s important to read the detailed rules.
If you sell zero-rated goods or services, you can generally reclaim VAT on any purchases that relate to those sales. This is in contrast to if you sell only exempt goods or services, where you cannot normally reclaim VAT on your purchases.
VAT must not be charged for and cannot be claimed for goods and services:
- Exempt from VAT
- Outside the scope of VAT
Exempt goods and services are not taxable for VAT, implying:
- No VAT charge goods or services, and
- Cannot normally claim back the VAT on related purchases
Goods and services that are exempt from VAT include:
- Insurance except for Insurance Premium Tax (IPT) that may apply instead
- Some services from doctors and dentists
- Some types of education and training
If you sell or otherwise supply only exempt goods or services, you cannot register for VAT and you cannot charge VAT. If you buy exempt goods or services, you aren’t charged VAT so there is none to claim back.
Summary of VAT rate Table
VAT on fuel for private use in cars
The table shows the VAT chargeable for quarters commencing on or after 1 May 2012.
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