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

From

4 Jan 2011

Standard rate

20%

VAT fraction

1/6

Reduced rate

5%

Taxable Turnover Limits
Registration – last 12 months or     next 30 days over

£77,000 from 1 April 2012

Deregistration – next 12 months     under

£75,000 from 1 April 2012

Cash accounting scheme – up to

£1,350,000

Optional flat rate scheme – up to

£150,000

Annual accounting scheme – up to

£1,350,000

 

VAT on fuel for private use in cars

The table shows the VAT chargeable for quarters commencing on or after 1 May 2012.

CO2 emissions
(g/km)

Quarterly VAT

Fuel scale
charge £

VAT on charge
£

Up to 124

166

27.67

125-129

250

41.67

130-134

266

44.33

135-139

283

47.17

140-144

300

50.00

145-149

316

52.67

150-154

333

55.50

155-159

350

58.33

160-164

366

61.00

165-169

383

63.83

170-174

400

66.67

175-179

416

69.33

180-184

433

72.17

185-189

450

75.00

190-194

467

77.83

195-199

483

80.50

200-204

500

83.33

205-209

517

86.17

210-214

533

88.83

215-219

550

91.67

220-224

567

94.50

225 and above

583

97.17

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