Almost everything we buy in the shop is VAT taxed. This is a value added tax. VAT is charged for most of transactions and also for many goods and services. There are three VAT pay rates in United Kingdom.
- 20% (normal),
- 5% (reduced),
- 0% (zero).
You are obliged to register as VAT payer if you qualify with conditions below:
Your company made £85,000 income in the last 12 months.
You can register voluntarily regardless of company’s turnover. It can only pay off when materials and products are bought in other European countries where income is often zero taxed.
You predict that next month your turnovers can overrun limit of annual £85,000.
You bought products in other European countries worth more than registration limit £85,000 in calendar year. Goods and services VAT taxed are called “taxable”.
After registration you must start charging every taxable activity with VAT tax. VAT tax settlement is ought to be done every three months. VAT does not concern every area. Off (exempt) are among others insurance, postal services, health and education.
Payable VAT tax to HM Revenue and Customs there is a difference between sales tax and input tax.
When it comes to input tax, if it is higher than payable tax you may have refund from HM Revenue and Customs. VAT payments are made most frequently in every quarter after VAT declaration, however in some payment schemes can be made monthly.