{"id":488,"date":"2025-03-11T10:40:00","date_gmt":"2025-03-11T10:40:00","guid":{"rendered":"https:\/\/www.experlu.co.uk\/dictionary\/?p=488"},"modified":"2025-03-26T08:10:50","modified_gmt":"2025-03-26T08:10:50","slug":"vat","status":"publish","type":"post","link":"https:\/\/www.experlu.co.uk\/dictionary\/vat\/","title":{"rendered":"VAT"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">What is VAT?<\/h2>\n\n\n\n<p>VAT, or Value Added Tax, is an indirect tax on consumption- paid by consumers when buying goods and services.<\/p>\n\n\n\n<p>Since January 2011, most goods and services in the UK have been subject to a standard VAT rate, i.e. 20%.&nbsp;<\/p>\n\n\n\n<p>Businesses must apply for VAT registration only if annual taxable turnover exceeds the <strong><a href=\"https:\/\/www.experlu.co.uk\/blog\/a-quick-guide-to-vat-when-you-are-self-employed\/\">VAT<\/a><\/strong> threshold in the previous 12 months or the next 30 days. Currently, the VAT threshold is \u00a390,000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How much is VAT in the UK? (VAT rates)<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The standard rate of VAT is 20%,&nbsp;<\/li>\n\n\n\n<li>The reduced rate is 5%, for (health or energy-related goods) and&nbsp;<\/li>\n\n\n\n<li>There is a 0% (Zero) rate for some exceptional products such as children&#8217;s clothing and boots.<\/li>\n\n\n\n<li>Some goods are exempted from VAT.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">VAT Return<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A VAT Return shows how much VAT you owe HMRC (or how much they owe you). Most businesses submit quarterly, whereas large firms do it every month.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>VAT return&#8217;s calculation is a process of deducting the VAT you pay to the suppliers from the VAT you collected from your customers. The difference is your VAT liability.<br><\/li>\n<\/ul>\n\n\n\n<p class=\"has-white-color has-vivid-purple-background-color has-text-color has-background\">       <span class=\"has-inline-color has-white-color\">                    VAT liability = VAT collected from customers \u2013 VAT paid to suppliers<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In case you paid excess of VAT, you will be due a refund from the HMRC.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Most businesses file VAT returns every quarter. &nbsp;The deadline for filing a VAT return is one calendar month and seven days after VAT quarter-end.<\/li>\n\n\n\n<li><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What is the differentiation between zero-rated and VAT-exempt?<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Zero-rated and VAT-exempt are not the same. When an item is zero-rated, it is still VAT taxable at 0%. Even if you charge 0%, you must still keep track of the sale and document it on your VAT return.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Sales of zero-rated products count against your \u00a390,000 12-month threshold.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Exempt supplies aren&#8217;t required to be recorded on your VAT return, and they don&#8217;t count against your VAT threshold.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>What is VAT? VAT, or Value Added Tax, is an indirect tax on consumption- paid by consumers when buying goods and services. Since January 2011, most goods and services in the UK have been subject to a standard VAT rate, i.e. 20%.&nbsp; Businesses must apply for VAT registration only if annual taxable turnover exceeds the [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[60],"class_list":["post-488","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-vat"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is VAT?<\/title>\n<meta name=\"description\" content=\"Confused about VAT? Learn what Value Added Tax is, how it works, and how to register. 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