Common VAT Accounting Questions

What are the Current VAT Rates? 

The current VAT rates are:

• Standard rate: 20%
• Reduced rate: 5%
• Zero rate: 0%

The standard VAT rate is 20% on most goods and services.

 

What is the UK VAT Threshold? 

Businesses must register for VAT if their VAT taxable turnover is more than £85,000. However, a business can choose to register voluntarily if their turnover is less than £85,000.

 

How to Register for VAT?

VAT registration is done through HMRC. In order to register you will need to set up a government gateway. The link for this is https://www.gov.uk/register-for-vat

 

What is Flat Rate VAT? 

The VAT Flat Rate Scheme is a way of paying VAT whereby a business pays a fixed percentage of its annual turnover. The flat rate VAT scheme is a scheme that is available to businesses that have a taxable turnover of less than £150,000. It helps save time on bookkeeping compared to the standard scheme. Before registering under the flat rate scheme, you should check whether your business is classed as limited cost. There is an online calculator which can help you with this which is – https://www.gov.uk/vat-flat-rate-scheme/how-much-you-pay

 

How do you Obtain a VAT number?

When you register for VAT, HMRC will provide you with a VAT identification number that you will need to show on your sales invoices and any correspondence.

 

How do you Deregister for VAT? 

If you wish to deregister for VAT, you must fill in a deregistration form. This can be sent online via your government gateway or by way of paper using VAT7 form.