VAT (Value Added Tax)

VAT is a common abbreviation for Value Added Tax. This tax is added onto the cost of most goods and services in the UK. The current VAT rate for most goods and services is 20%. If you are self-employed, you need to register for VAT if you earn over the threshold of £85,000 per annum.

Reasons to register for VAT:

  • If you earn over £85,000 from self-employment (unless you provide VAT exempt services, such as training)
  • If you want to claim back VAT that you’ve paid on your purchases (for example, VAT you would have paid when you bought the laptop you use for work)

VAT Exempt

VAT exempt means that you don’t have to either pay or charge VAT on a product or service. If you provide these services, you don’t need to register for VAT and charge VAT on them – even if you earn above the £85,000 threshold. If you purchase a VAT exempt product, you can’t claim VAT back from HMRC.

Here’s a list of common goods and services that are VAT exempt:

  • Education and training
  • Fundraising events
  • Finance, like interest on loans or insurance
  • Subscriptions or memberships

Frequently Asked Questions

Search More Terms

View our latest news & insights

14 February 2024
Navigating the landscape of business taxes in the UK can seem daunting, especially given the range of taxes that might a...
Navigating the landscape of business taxes in the UK can seem daunting, especially given the range of taxes that might apply to your organization. However, understanding which taxes are relevant to your business is crucial for com...
17 January 2024
Your business has costs to deal with and pay as part of their day-to-day trade and as part of ad hoc strategies. They ty...
Your business has costs to deal with and pay as part of their day-to-day trade and as part of ad hoc strategies. They typically range from phone line bills, postage and stationery to computer software and travel costs. Being the o...