Value added tax

Registered businesses charge Value Added Tax (VAT) on their sales. This is known as output VAT and the sales are referred to as outputs.

Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT.

There are three rates: standard which applies to most goods and services, reduced rate for some goods and services such as home energy and zero rate goods and services, for example, most food and children's clothes.

Some supplies are exempt from VAT for example postage stamps, financial and insurance transactions.

A business is required to register for VAT if the value of taxable supplies exceeds the annual registration limit.

The government has frozen the VAT registration and deregistration limits until 1 April 2022.

Rates

Standard: 20%

Reduced: 5%*

* 12.5% for hospitality and tourism from 1 October 2021 to 31 March 2022.

Limits

Annual Registration Limit (1.4.21 to 31.3.22): £85,000

Annual Deregistration Limit (1.4.21 to 31.3.22): £83,000

ACCA logo

Registered to carry on audit work and regulated for a range of investment business activities in the UK by the Institute of Chartered Accountants in England and Wales.

Details of our audit registration can be viewed at www.auditregister.org.uk under the reference number C006265017

Robinson Sterling, Chartered Accountants is the trading name for Robinson Sterling SBU Limited, a company registered in England.
Company Registration Number: 11281848