£
£
VAT Rate20%
Net (excl. VAT)£1,000.00
VAT (20%)£200.00
Gross (incl. VAT)£1,200.00
UK VAT Rates
Standard rate20%
Reduced rate (energy, car seats)5%
Zero rate (food, children's clothes)0%
VAT registration threshold£90,000
UK VAT Explained
Value Added Tax (VAT) is charged on most goods and services in the UK at 20%. Some items like energy and child car seats are at the reduced rate of 5%, while essentials like food and children's clothing are zero-rated. Businesses with turnover above £90,000 must register for VAT.
Flat Rate Scheme
Small businesses can opt for the Flat Rate Scheme, paying a fixed percentage of gross turnover (varying by industry, typically 9-14.5%) instead of tracking input and output VAT. This simplifies accounting but may mean paying more or less VAT depending on your expenses.