What is VAT
What is VAT? Your Guide to Value Added Tax in the UK
Value Added Tax (VAT) is a consumption tax levied on goods and services throughout the supply chain in the UK. If you’re a business operating in the United Kingdom, understanding your VAT obligations is crucial. Businesses with a taxable turnover exceeding £90,000 (the VAT registration threshold) are legally required to register for VAT and apply it to their products and services.
At Aksons Accounting & Finance UK, we specialize in comprehensive VAT Services & Advice, helping businesses in Bradford, UK, and across the nation navigate this notoriously complex tax. Our expert team ensures your VAT accounting is precise, managing everything from VAT returns and VAT management to ensuring full Indirect Tax compliance.
Whether you’re concerned about VAT on services UK (including digital products, car servicing, consultancy, or cleaning), or need specific guidance on Value Added Tax (VAT) Service on Amazon UK, our specialists provide practical solutions. We proactively identify opportunities for VAT efficiency, helping you minimize risk and maximize compliance, even with evolving case law and stricter HMRC penalties.
VAT in the UK is typically charged at:
UK VAT Rates Explained
In the UK, VAT is generally:
- 20% (Standard): For most goods and services.
- 5% (Reduced): For domestic fuel, power, and some health/protective items.
- 0% (Zero-rated): For most food, public transport, books, and children’s clothing.
- Exempt: For specific services like finance, insurance, and some property transactions (no VAT charged, no VAT reclaimed on costs).
- Outside Scope: For items like stamps, where VAT rules don’t apply.
Businesses charge VAT based on sales and must comply with HMRC rules.
Your VAT registration number
The government gives your business a unique nine-digit number, prefixed with ‘GB’.
Company numbers are only given to VAT-registered businesses and can be found on your registration certificate, which also outlines when your company passed the registration threshold and when your first VAT return is due.
What is my VAT payment date?
If you need to check your VAT Return and payment deadlines, you can do this by signing into the Government Gateway and accessing your VAT online account.
Your VAT online account will provide you with the following:
- When your VAT Returns are due
- When the payment must clear HMRC’s account.
The submission and payment dates tend to be the same, and calculated one calendar month and seven days after the accounting period end.
Example: If your VAT period ends on March 31. Then, by May 7, you will have to pay the VAT owed. If paying by direct debit, payments are usually taken three days after the VAT return deadline.
Online VAT calculator
Visit HMRC’s website to determine when you must make your VAT payment for the current accounting period. You will be unable to use this calculator if you pay on account or use the annual accounting scheme. Use an approved accounting software provider to send your VAT return, and keep digital records.
How does VAT work?
Your company will need to submit VAT returns to HMRC on a monthly, quarterly, or annual basis. The return summarises the VAT collected on sales and the VAT incurred on expenditure during that period. If the collected figure exceeds the VAT incurred, you pay the difference to HMRC. If the VAT incurred is greater, HMRC will refund the difference.
Paying your bill
HMRC only accepts a direct debit or internet banking as a method of payment. They do not accept cheques. If you are having trouble making payments, contact them straight away.
Is your business ready for making tax digital for VAT?
Making Tax Digital (MTD) is changing how UK businesses do their taxes. It is now mandatory for VAT-registered businesses to keep records and submit their VAT returns digitally.
We use approved accounting software Xero, QuickBooks and FreeAgent, and we are fully accredited and MTD compliant.
We will help you file your VAT returns digitally and provide VAT advice and assistance whenever you need it.