• The Business plan
• Marketing and Sales Planning
• Financial Planning
• Complying with the law
  • Health & Safety
  • Trading Standards
  • VAT
• Employing for the first time
• Innovation
• Support Schemes
• Resource Efficiency
• Business Sectors

VAT

If you run a business you'll need to know about VAT rates and registration thresholds.

A VAT registered business charges VAT when selling goods or services and in turn they can generally reclaim the VAT they have paid on any goods and services purchased.

There are three rates of VAT, depending on the goods or services the business provides. The current rates are; standard @ 20%, reduced @5% and zero @0%. There are also some goods and services that are exempt from VAT or outside the UK VAT system altogether.

Find out what's exempt from VAT or outside the scope, and what rate of VAT is charged on sales by visitng www.hmrc.gov.uk

In addition to sales, a VAT registered business must account for and pay VAT on:

• items sold to staff, such as canteen meals or via vending machines
• sales of business assets
• hiring or loaning of goods to someone else
• commission received from selling something on behalf of someone else
• certain business gifts
• goods that you or your staff take out of the business for personal use, whether on a temporary or permanent basis
• services supplied to the business but then used privately

VAT is also chargeable on:

• barter
• part-exchange
• gifts
• samples

A business should consider registration if VAT taxable turnover (see explanation below) for the last 12 months is more than £73,000 (April 2011 threshold for VAT registration). The de-registration threshold is £71,000 (April 2011). Check Current VAT Registration Threshold|

A VAT taxable turnover is the total of sales and certain other supplies that are subject to VAT, including supplies that are zero-rated. If goods or services sales are exempt from VAT they're not subject to VAT and so they're not part of VAT taxable turnover.

There are some VAT schemes that businesses may be able to take advantage of to reduce paperwork and save time. A business can only use some of these schemes if VAT taxable turnover is below a certain threshold. See VAT scheme basics|

HMRC The VAT Guide| - This guide explains the basics of how VAT works. It also tells you where you can find more information and advice.

VAT Helpline 0845 010 9000 Open 8.00 am to 6.00 pm, Monday to Friday. Closed week ends and bank holidays. Textphone 0845 000 0200 for customers who are deaf or hearing or speech impaired. If calling from abroad please telephone: +44 2920 501 261.

Before ringing, make sure you have your VAT registration number and postcode to hand. If you're not VAT registered you'll just need your postcode. The VAT Helpline cannot take payments over the phone or agree time to pay. Telephone 0845 010 8500 if you need help with a technical problem with VAT online services.