United Kingdom

Based in the United Kingdom

In the UK you need to register for VAT if:

• You store goods In the UK
• You sell them to consumers based in the UK; and
• Your sales exceed the UK domestic VAT threshold of £85,000

You may also need to register for VAT separately in other EU countries if:

• You sell goods to consumers in other EU countries and exceed the thresholds.

Based in a different EU Country

You need to register for VAT in the UK if:

• You store your goods in the UK or
• You sell to UK-based consumers (non-business) with an item value below £135; and
• Since Brexit, January 1st 2021 the threshold is NIL

Based Outside the EU

You need to register for VAT in the UK if:

• You store goods in the UK
• You sell goods to UK consumers from outside of the EU

You may also need to register for VAT separately in other EU countries if:

• You sell goods to consumers in other EU countries.

Types of UK VAT

Registering for VAT in the United Kingdom

Registration in the UK is generally one of the fastest in Europe, using the online application and providing the correct documents immediately will normally produce a VAT number in under 4 weeks unless further investigations are taken, further info is normally required for businesses outside of the EU to register.

There are a number of scenario’s that a business would be required to register for VAT in the UK which include;

• You store goods in a UK fulfilment centre or warehouse
• You are selling to UK consumers from another EU country and have exceeded the £70,000 Distance selling threshold
• You sell to UK consumers from outside of the EU
• Organising events in the UK

What are the United Kingdom’s VAT Thresholds

• For foreign businesses trading in the United Kingdom that are VAT/GST/Tax registered in their home state, the VAT registration threshold is nil.
• If you store goods in the UK, the registration threshold is nil and you should register before transferring stock
• If you sell goods below £135 (low value threshold) you are required to collect VAT at point of sale and VAT register

UK VAT Reporting

All UK VAT returns are filed quarterly,

Once registered, a business will be assigned to a “VAT stagger group”. The group assigned will determine the month in which VAT quarters end and when payments and VAT returns are due for submission. The three stagger groups are as follows:

• Stagger group 1 – quarters ending March, June, September, December
• Stagger group 2 – quarters ending April, July, October, January
• Stagger group 3 – quarters ending May, August, November, February

UK VAT Schemes

There are a number of different VAT schemes available in the UK which may or may not suit your business.

UK Cash Accounting Scheme

Usually, the amount of VAT you pay HM Revenue and Customs (HMRC) is the difference between your sales invoices and purchase invoices. You have to report these figures and pay any money to HMRC even if the invoices haven’t been paid.

With the Cash Accounting Scheme you:

• pay VAT on your sales when your customers pay you
• reclaim VAT on your purchases when you have paid your supplier
• To join the scheme your VAT taxable turnover must be £1.35 million or less.

UK Margin Scheme

The VAT margin schemes taxes the difference between what you paid for an item and what you sold it for, rather than the full selling price. You pay VAT at 16.67% (one-sixth) on the difference.

You can choose to use a margin scheme when you sell:

• second-hand goods
• works of art
• antiques
• collectors’ items

You can’t use a margin scheme for:

• any item you bought for which you were charged VAT
• precious metals
• investment gold
• precious stones

UK Flat Rate Scheme

The amount of VAT a business pays or claims back from HM Revenue and Customs (HMRC) is usually the difference between the VAT charged by the business to customers and the VAT the business pays on their own purchases.

With the Flat Rate Scheme:

• you pay a fixed rate of VAT to HMRC
• you keep the difference between what you charge your customers and pay to HMRC
• you cannot reclaim the VAT on your purchases – except for certain capital assets over £2,000
• To join the scheme your VAT turnover must be £150,000 or less (excluding VAT), and you must apply to HMRC.

UK Annual Accounting Scheme

Usually, VAT-registered businesses submit their VAT Returns and payments to HM Revenue and Customs 4 times a year.

With the Annual Accounting Scheme you:

• make advance VAT payments towards your VAT bill – based on your last return (or estimated if you’re new to VAT)
• submit 1 VAT Return a year

When you submit your VAT Return you either:

• make a final payment – the difference between your advance payments and actual VAT bill
• apply for a refund – if you’ve overpaid your VAT bill

The scheme would not suit your business if you regularly reclaim VAT because you’ll only be able to get 1 refund a year (when you submit the VAT Return).

You can join the scheme if your estimated VAT taxable turnover is £1.35 million or less.

UK VAT Rates

• 20% Standard – All other taxable goods and services
• 5% Reduced – Children’s car seats; certain social housing; some social services; electricity, natural gas and district heating supplies (for domestic use only); some energy-saving domestic installations and goods; LPG and heating oil (for domestic use only); some renovation and repairs of private dwellings; some medical equipment for disabled persons
• 0% Zero – Some social housing; printed books (including e-books); newspapers and periodicals; renovations to private housing (Isle of Man only); collections of domestic refuse; household water supplies (except distilled and mineral water); supplies of food and drink (some exceptions); take away food (if bought on the catering premises); cut flowers and plants for food production; prescribed pharmaceutical products; certain medical supplies for disabled persons; domestic passenger transport; children’s clothing and footwear; children’s diapers; live animals destined for human consumption; seed supplies; supply of animal feed; supplies of residential caravans and houseboats; some construction work on new buildings; some supplies of new buildings; sewerage services; motor cycle and bicycle helmets; commercial ship and aircraft stores; intra-community and international passenger transport; some gold ingots, bars and coins