VAT
UK VAT - registration and returns.
Value Added Tax in the United Kingdom applies to virtually every business whose turnover exceeds the statutory threshold. We guide you through the entire process - from HMRC registration, through quarterly returns filed under Making Tax Digital, to reclaiming overpaid tax. We act quickly, meet every deadline and stay fully compliant with current legislation.
Basics
What is VAT?
VAT (Value Added Tax) is a consumption tax charged at every stage of the supply chain for goods and services in the United Kingdom. It is administered by HM Revenue & Customs (HMRC). Every business whose annual turnover exceeds the set threshold must register as a VAT taxpayer, charge VAT on invoices and submit regular returns.
- VAT applies to nearly all goods and services sold in the UK
- Certain categories (healthcare, education) are exempt
- Registration becomes compulsory once the turnover threshold is exceeded
- Timely filing protects you from HMRC penalties
Rates
How much is VAT in the United Kingdom?
The standard VAT rate in the UK is 20% and covers most goods and services. Alongside it there are two preferential rates: a reduced rate of 5% (including domestic energy, child car seats) and a zero rate of 0% (most food items, children's clothing, books). Correctly applying the right rate has a direct impact on the amount of tax you owe or can reclaim.
- 20% - standard rate on most goods and services
- 5% - reduced rate (domestic energy, child car seats)
- 0% - zero rate (food, children's clothing, books)
- VAT-exempt - healthcare, education and financial services
Registration
VAT registration - when and how?
You must register for VAT when your business's annual turnover exceeds GBP 90,000, or when you expect to exceed that threshold within the next 30 days. However, you can register voluntarily at any time - this is worthwhile if you want to reclaim VAT on business purchases. Registration is completed online through the HMRC portal.
- Compulsory registration threshold: GBP 90,000 annual turnover
- Voluntary registration is available at any time
- Company registration requires a UTR number and bank account details
- Your VAT number arrives by post - only then can you issue VAT invoices
MTD
Making Tax Digital and quarterly returns
Every VAT-registered business in the UK must file quarterly returns through the Making Tax Digital (MTD) system. This means keeping digital records and submitting data to HMRC via compatible software. Returns must be filed even if there were no taxable transactions during the quarter.
- VAT returns filed quarterly through the MTD system
- Mandatory digital record-keeping for all transactions
- Use of HMRC-compatible software required
- Late filing carries financial penalties and interest charges
Refunds
Reclaiming VAT on business purchases
If the input VAT on your business purchases exceeds the output VAT on your sales, you are entitled to a refund of the difference from HMRC. The condition is properly maintained documentation - complete purchase invoices kept for a minimum of 6 years. We prepare the claim and monitor its progress on your behalf.
- Refund of input VAT exceeding output VAT
- Records must be kept for at least 6 years
- Refund claimed as part of the quarterly VAT return
- Monitoring the refund status and liaising with HMRC
Brexit & FAQ
VAT after Brexit - what has changed?
Since the UK left the European Union, goods imported from EU countries are treated the same as imports from non-EU nations. This means customs clearance, import declarations and VAT charged at the point of entry are now required. In some cases postponed VAT accounting is available, which helps preserve your business's cash flow.
- EU imports now require customs declarations and VAT
- Postponed VAT accounting - deferring payment on imports
- Increased documentation requirements for cross-border transactions
- New rules for reclaiming VAT on purchases made in EU countries
Need help with VAT?
Speak with our adviser.
Tell us about your situation - registration, returns, refunds - and we will explain what needs to be done and how much it costs. Free consultation, no obligation.