03/01/2025
📌VAT (Value Added Tax) is a tax added to most products and services sold by VAT-registered businesses.
‼️Businesses have to register for VAT if their total taxable turnover for the last 12 months goes over £90,000 (the VAT threshold)or they expect their taxable turnover to go over £90,000 in the next 30 days.
There are 3 different rates of VAT that can be added to products:
✅ Standard rate - 20% (Most goods and services)
✅ Reduced rate - 5% (Some goods and services, eg children’s car seats and home energy)
✅ Zero rate - 0% (Zero-rated goods and services, eg most food and children’s clothes)
🟡Which one applies depends on the goods and services, and how they’re used.
📌VAT schemes⬇️
✔️VAT schemes are designed to simplify the way some VAT-registered businesses calculate and account for VAT to HMRC.
🔴VAT Flat Rate Scheme
✅The VAT Flat Rate Scheme lets you work out what you owe HMRC in VAT as a percentage of your gross turnover.
✅You can only use this scheme if you’re a small business with an annual taxable turnover of £150,000 or less excluding VAT.
✅The amount of VAT you pay depends on your industry and type of business.
With the Flat Rate Scheme:
*🔘you pay a fixed rate of VAT to HMRC
*🔘you keep the difference between what you charge your customers and pay to HMRC
*🔘you cannot reclaim the VAT on your purchases - except for certain capital assets over £2,000
⭕️Other VAT schemes
There are other VAT schemes you may be able to join depending on your VAT taxable turnover and type of business.
If your annual VAT taxable turnover is £1.35 million or less, you may be eligible for the:
*🔴VAT Annual Accounting Scheme - complete one VAT return each year instead of 4
* 🔴VAT Cash Accounting Scheme - pay VAT to HMRC when your customer pays you rather than when you invoice them.
If you are a retail business or sell second-hand goods, you may be able to use:
* 🔴a VAT margin scheme - pay VAT on the value you add to the goods you sell rather than on the full selling price of each item
* 🔴one of 3 VAT retail schemes - calculate the VAT once with each VAT return rather than calculating it for each sale you make.
‼️If you need help with you VAT Return call us
📞07883591242