Value Added Tax Rates

Value Added Tax Rates

Registered businesses charge VAT on their sales. This is known as output VAT and the sales are referred to 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.

Rate %
Standard Rate  20%
Reduced Rate 5%
Registration Level from 01/04/2014 £83,000 pa
Deregistration Level from 01/04/2014 £81,000 pa
Optional Flat Rate Scheme – up to £150,000
Annual accounting scheme – up to  £1,350,000
Cash Accounting Scheme  £1,350,000

VAT as a fraction of gross price – 1/6th