VAT made simple

If your annual taxable sales are more than £90,000 a year, you need to register for VAT and submit a VAT return via digital software.

Value Added Tax is charged on all kinds of goods and services and the rules are complex. But it’s not an extra worry you need to carry.

We’ll ensure:

your VAT is recorded correctly
you claim all the VAT you’re entitled to
your VAT return is HMRC-compliant and submitted on time, avoiding unnecessary fines and penalties
your accounting software is set up for easier routine record-keeping.

VAT rates explained

The goods or services you sell dictate the VAT rate you charge. Some things are exempt from VAT.

Standard rate – 20% on most goods and services.
Reduced rate – 5% on some goods and services, for example, child car seats and home energy.
Zero rate – 0% on most foods, as well as children’s clothes, printing, and financial services.

There’s a fuller explanation of VAT rates on the UK Government website.

The complexity of VAT plays out in lots of different ways. Check out these mind-boggling quirks of UK VAT rules … who knew VAT could be such fun?

Biscuits with chocolate on top (like chocolate digestives) are standard-rated for VAT.
Biscuits with chocolate incorporated (like bourbons and choc chip cookies) are zero-rated.
Gingerbread people with just two chocolate eyes are tax-free, but add a smile, a belt, or any other bling and they have to pay standard-rate VAT.
Buy a gerbil from a pet shop, and you’ll pay full VAT. But if you buy a rabbit, it’s tax-free – because rabbits are classified as food!