What are the rates of VAT in the UK?

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Value-added tax, or VAT, is applied in most countries in Europe and around the world. It applies as a charge on the purchase of various types of taxable goods and services. In each country, different rates of VAT are applied. These depend on the area of supply of the products and their type. In the UK, the tax authority is HMRC (His Majesty’s Revenue & Customs) and is responsible for all taxation matters.

The United Kingdom is an attractive country to run your own business. With numerous consumers, a business can expect to increase its reach and sales revenue. The business environment is changing rapidly, so it is worth having a closer look at UK taxation, particularly VAT.

VAT, or value added tax

Value-added tax, or VAT, is applied in most countries in Europe and around the world. It applies as a charge on the purchase of various types of taxable goods and services. In each country, different rates of VAT are applied. These depend on the area of supply of the products and their type. In the UK, the tax authority is HMRC (His Majesty’s Revenue & Customs) and is responsible for all taxation matters.

Various rates of VAT in the UK

There are four basic rates of VAT in the UK. In addition, the government can introduce temporary rates if there is a need in the market. Certain types of goods are assigned to the rates, but the list may change. It is therefore worth keeping up to date with the tax regulations. The standard VAT rate is 20%, while the reduced rate is 5%. In some cases, a zero rate of 0% VAT is also applied.

Standard and reduced rate of VAT

The standard rate applies to most goods and services that are not exempt from VAT. In the UK, the reduced rate is applied to certain products such as fuel, electricity used to heat homes, goods and services relating to the installation of heating equipment, products for children, contraceptive products or which provide mobility aids for the elderly.

Zero-rate and VAT exemption

Zero-rate VAT is used for goods such as books, newspapers, audiobooks, prescription medicines, aids for the disabled, as well as clothing and footwear for children and sanitary products for women. Fully exempt from VAT, however, are medical services, including dental services, as well as diagnostic, educational, financial and insurance-related services. These are examples of goods, the full list is of course much longer.

Temporary rates and partnership with a consultancy firm

Temporary VAT rates may be different, for example, 12.5%. They may apply to certain product categories for a set period of time. After the designated period, the rates return to their original level. Given the high dynamics of change when running a business, it is advisable to work with a specialized tax advisory firm. One of the recommended companies is Intertax. Its employees will quickly advise on the best solution to the individual needs of the entrepreneur.

For more information on UK taxes, please visit: https://polishtax.com/vat-rate-2023-2024-how-much-is-vat-in-the-uk/. In this way, you can ensure that your business does not cause unexpected losses and that you are free to explore new markets.

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