Rates of tax
The standard rate of VAT remains 17.5%, or 7/47 of the consideration received for making a supply.
A lower rate of 5% (or 1/21 of the gross receipt) applies to supplies including domestic fuel
and power, installation of energy saving materials in houses, and some conversions of residential property.
A zero rate applies to a range of supplies including most food, books, new houses, and children's clothes.
Certain other supplies are exempt, which means no tax is charged to the customer, but the supplier
cannot recover VAT on costs. These include many land-related supplies, insurance, finance, education,
health and welfare, and non-profit sports clubs.
An unregistered business must register if it has made £61,000 of taxable supplies in the last 12
months, up to any month end, or if it expects to make £61,000 of taxable supplies in the next 30 days.
A registered business can deregister if it can satisfy Customs that taxable supplies in the next year
will not exceed £59,000.
Small businesses with taxable turnover of up to £150,000 can opt to use the 'flat-rate scheme'.
A single rate, which varies with the type of business, is applied to all receipts, and no VAT is claimed
on costs. The single rate is lower than 7/47 to compensate for lost input tax.
Small businesses with taxable turnover of up to £660,000 can use the cash accounting scheme (only
paying VAT to Customs when customers have paid). The annual accounting scheme (filing a single VAT return
each year instead of one every three months) is available with turnover up to £1.35m..
Scale charge for private use of fuel paid for by business
|0 - 1400cc
|1401cc - 2000cc
The figures are the net 'supply' and (in brackets) the VAT on it.
Returns and payments
Most VAT returns are prepared for three-month periods, and they are due (with any payment) by the end of the next month.