VAT - Value Added Tax
Value Added Tax
This Tax is added to your selling price, selling an item for £100, costs your customer £120.
If you sell over £85,000 per year you have to VAT register.
MTD, Making Tax Digital means you now have to file VAT returns electronically via Xero and FreeAgent.
B4Bookkeeping can manage your VAT in Xero and FreeAgent
Types of VAT
There are two main types of VAT, Standard and Flat Rate.
Standard VAT means 20% you have to pay and claim 20% on your Sales and Expenses.
Flat rate VAT means you still Charge 20% on your sale but only pay a % based on your type of business, e.g. Photographer 11%.
e.g. the £1200 sale has £200 VAT; under the flat rate you pay £132 to HMRC.
B4B can manage all this for you without any stress.
MTD - Making Tax Digital
The Government made it compulsory to file VAT digitally, both Xero and FreeAgent enable this.
More taxes are becoming MTD over the coming years.
Types of VAT
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Standard rated - 20% e.g. Chocolate biscuits
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Zero-rated - 0%, e.g. Children's clothes, milk
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Exempt - No VAT, e.g. Health services
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Reduced rated - 5%, e.g. Electricity and water
B4Bookkeeping can help you get VAT registered and advise on what VAT rate to use.