VAT Rates And Thresholds
Value Added Tax (VAT) is levied on the sale of goods or services by UK businesses. VAT is collected on behalf of HM Revenue & Customs by companies.
A company pays VAT to HMRC by calculating the amount of VAT charged to customers minus any VAT they have paid on their own purchases.
VAT is charged on goods at different levels. The current standard rate of 20% applies to most items. A Reduced Rate of 5% applies to some items including mobility aids for the elderly, smoking cessation products (nicotine patches and gum), electricity and gas for domestic and residential use and children's car seats.
Questions you may ask:
- What is the VAT treatment for acquiring new vehicles?
- How does VAT work for company vehicle services?
How does it work?
If your turnover in a 12 month period is £85,000 or more (2020/21) you must register for VAT and subsequently file VAT returns. Until your business reaches this compulsory VAT registration threshold, you will have the choice to become voluntarily VAT registered.
|Value Added Tax (VAT)||2019/20||2020/21|
|Registration (last 12 months or next 30 days)||£85,000||£85,000|
The information provided is based on existing and proposed legislation as at March 2020 (11th March 2020 UK Budget). Whilst every effort has been made to ensure that information given is accurate and not misleading, this information is intended to provide a quick reference to the current tax regulations relating to company vehicles and how they impact employers and employees. The content has been provided for informational purposes only and should not be relied on as a substitute for professional advice. No responsibility can be accepted by LetsTalkFleet Ltd for any loss or liability occasioned by any person acting on or refraining from action as a result of viewing this information.