Understanding UK VAT 2024

Updated in line with new VAT threshold in the UK (as of April 2024) When do I need to register my company for VAT? What are the different VAT rates? How do I report VAT to UK authorities? Watch the video to learn about UK VAT and how Goodwille can support with handling VAT for your business.
About this Video

Updated in line with new VAT threshold in the UK (as of April 2024)

You may already be familiar with the term ‘VAT’, but it’s important to remember that VAT might work differently in the UK than the regions where you already operate. Let’s go through what you need to know for your UK-based operations.

How does UK VAT work?

VAT, or Value Added Tax, is a tax charged on the sale of most goods and services in the UK. The first thing to note is that you can only charge and claim VAT if your business is registered for VAT, which is a must if your turnover for any 12-month period exceeds or is expected to exceed the threshold.

Once your business is VAT-registered, you must charge VAT on your goods or services and report to HMRC the amount of VAT you’ve charged and incurred. This is done via a VAT return submitted electronically, usually on a quarterly basis.

In the UK, there are three different rates of VAT

  • Standard Rate VAT: First, there’s a standard rate, which you’ll find charged on most goods or services.
  • Reduced Rate VAT: A reduced rate VAT is charged on things like children’s car seats, sanitary products and energy saving measures.
  • Zero Rate VAT: Then the zero rate is applied to most food, books, newspapers and children’s clothes.

There are also some items, for example postage stamps and financial and property transactions, which are classified as ‘exempt’ from VAT. This means that no VAT is charged on these goods and services.

For these zero rate and exempt items, even though no VAT is charged these transactions still need to be recorded on your VAT return.

There are also different things to keep in mind depending on whether you are buying and selling goods or services within or outside the Eurozone.

VAT Submissions & MTD

At Goodwille we can help you with VAT registration and the quarterly VAT return submissions, ensuring they are Making Tax Digital compliant. No need to get it wrong and incur penalties – Simply get in touch and we can make sure you are handling UK VAT correctly.

Goodwille have helped hundreds of businesses with setting up UK establishments and subsidiaries and while most of our clients have historically favoured a subsidiary, it is worth taking specialist advice to make sure the decision you make is right for your business. Read more about the differences between a UK establishment and a subsidiary and contact us today for advice on the most suitable setup for your business.