VAT Flashcards
Which supplies are reduced rated? (VAT @ 5%)
Household supplies such as domestic heating and power, domestic fuel but not business fuel, mobility aids for the elderly, smoking cessation products, children’s car seats, sanitary hygiene products but not all health products.
Which supplies are zero-rated for VAT?
Public policy reasons - good, sewerage and water, books/newspapers, new houses, public transport, children’s clothing.
Taxable supplies - can still recover VAT. Transaction must be recorded in VAT accounts.
Which supplies are exempt for VAT?
Provision of insurance, finance, education, health services and the sale of land and buildings (unless it includes a new commercial building).
When a business makes exempt supplies, it does not charge VAT on its supplies but it’s also not able to recover input VAT.
What is input tax?
Input tax refers to VAT paid by the company on goods being brought into the business.
What is output tax?
VAT that the company charges on the goods and services it sells.
How often does a business make VAT returns?
Quarterly.
When must a trader register for VAT?
A trader must be registered for VAT if their turnover of taxable supplies within the UK for the previous 12 months exceeds the VAT registration threshold (£85,000 in 2023/24, £90,000 in 2024/25), or if the trader expects it to go over that figure in the next 30 days alone.
