(1) |
Standard rate: 20% Most of goods and services |
(2) |
Reduced rate: 5% Welfare: Mobility aids for the elderly; Smoking cessation products – nicotine patches and gum Power: Electricity, gas or heating oil for domestic and residential use or for non-business use by a charity Safety equipment: Children’s car seats, booster seats and booster cushions |
(3) |
Zero rate: 0% Welfare: Building services for disabled people; Equipment for disabled people; Equipment for blind or partially sighted people Transport: Aircraft repair and maintenance Publications: Books; children’s painting and picture books; magazines; printed or copied music |
(4) |
Exempt: Financial services and investment, insurance and health care, public postal services and stamps |
(5) |
Outside the scope of VAT: Tolls for bridges, tunnels and roads operated by public authority |
(1) |
A business that may generate taxable activities within the UK can voluntarily register for VAT. |
(2) |
When a business’s turnover for 12 consecutive months reaches £85,000 (the current VAT threshold), VAT registration must be submitted within 30 days of the end of the month, and the effective date of registration is the first day of the second month after the business go over the threshold. |
(3) |
If a business realises the turnover will go over the £85,000 threshold in the next 30 days, the business has to register by the end of that 30-day period. For example, a company entered a contract of £90,000 on 1 May. Payment is due by the end of the month. Based on the contract date, VAT registration must apply to register on 1 May by 30 May. |
(4) |
When a company takes over a business, the acquiring company must register for VAT if - the sold business was VAT registered, or - the combined taxable turnover of the two businesses is over the threshold. |
(5) |
Non-UK-based companies and non-UK-based persons must register for VAT (regardless of the VAT taxable turnover) in the UK if supplying goods or services to the UK. This overseas company is considered as a Non-established taxable person (NETP) who needs to appoint a tax representative (jointly and severally liable for VAT liabilities) or an agent (without joint and several liability). |
(1) |
to analyse the best time to do the application |
(2) |
to register the VAT application |
(3) |
to liaise with HMRC on behalf of the business. |
(1) |
A 9 digits VAT number, which needs to be presented on every sales invoice |
(2) |
Information on when to submit the first VAT return and payment |
(3) |
Registration effective date |
Defaults within 12 months |
Surcharge if annual turnover is less than £150,000 |
Surcharge if annual turnover is £150,000 or more |
1st |
No surcharge |
No surcharge |
2nd |
No surcharge |
2% (no surcharge if this is less than £400) |
3rd |
2% (no surcharge if this is less than £400) |
5% (no surcharge if this is less than £400) |
4th |
5% (no surcharge if this is less than £400) |
10% or £30 (whichever is more) |
5th |
10% or £30 (whichever is more) |
15% or £30 (whichever is more) |
6 or more |
15% or £30 (whichever is more) |
15% or £30 (whichever is more) |
No. |
Service |
Fee (£) |
1 |
VAT Registration |
300 |
2 |
VAT Return (per filing) |
150 + |
3 |
VAT Registration Cancellation |
300 |
Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |