An individual, partnership or company making taxable supplies in excess of the registration limits must be VAT registered and charge VAT on all taxable supplies and account for their VAT to HMRC.
There are three rates of VAT: 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, food and children’s clothes.
Turnover in the past year, or in the next 30 days applies to:
- Registration threshold – exceeds £85,000
- Deregistration threshold – below £83,000
Some supplies are exempt from VAT, for example, postage stamps and insurance transactions.
There are several VAT schemes which businesses can apply for which can reduce the administrative burden of VAT for example – Flat Rate Scheme.
This can also reduce the VAT liability in some circumstances.