VAT Rate in UK – United Kingdom VAT Rates & Thresholds in 2021

In the United Kingdom, VAT or Value Added Tax is one of the major sources of government revenue. However; the VAT Rate in UK is not the same every time like any other European country. According to government officials, the current UK VAT rates have been increased to 20%. The last time it was changed more than 10 years back in 2011, but till now it’s the same.
This standard United Kingdom VAT rate of 20% is charged on most of the goods and services within UK, however; some specific goods and services are also exempted from this standard 20% VAT rate. The standard VAT UK rate is 5% in some particular areas of the economy such as sanitary products, energy-saving products, children’s car seats, and many others.
You will be also amazed to know that the standard VAT rate is even charged 0% for some particular goods and services. This particular zero percent VAT rate is applied to books, food items, newspapers, and children’s clothes. As we all know that these particular items are related to education, this standard 0% VAT rate is followed to encourage the ease of education and several other sectors of the society.

VAT Exempt in England VAT Tax

The term “exempt” or VAT Exempt refers to those particular goods and services on which VAT rate is not applicable. Some specific items such as postage stamps, financial areas, and property-related transactions are exempted from UK Value Added Tax Rate.

European Union Law on VAT Rate

As we all know that UK is a very important member of the European Union, that’s why EU laws are strictly followed in the UK. There are also many fake news platforms on the internet which may misguide you on this very important matter. According to the EU laws, the standard VAT rate should remain above 15% in all European states otherwise it will be illegal to charge the standard VAT rate above 15% in any European nation. In the past few years, we have received a lot of queries regarding British VAT Tax as many websites have misreported this actual figure.

Who Pays VAT Taxes?

It’s one of the most common questions that you may have also seen on many online financial and revenue forums on the internet. As per our research and knowledge, businesses having more than 85k pounds of turnover should register on VAT.
Any business that falls under this category should be charged for VAT Tax on buying and selling products and services. However; if any business is not VAT registered, then they can also voluntarily pay the VAT tax anytime and register their business before any government crackdown or penalty.

However; charging VAT taxes UK from the customers for buying and selling goods/services is not enough. All the VAT tax returns should be submitted to the HMRC Department on time otherwise it will be considered illegal.

Click Here: VAT Flat Rate Scheme

How VAT Tax is Paid?

Well, VAT United Kingdom Tax is paid in several ways, you can choose the best way which is more convenient for you. The HMRC Department has specified these ways to ensure the maximum comfort and convenience of the Tax payers. These extra facilities are provided to every Taxpayer of the country to appreciate them for paying tax. In some other European countries other than the UK, the government also gives some extra facilities to all the VAT Tax holding businesses to appreciate them.
However; these are the following ways to pay VAT Tax to the HMRC department.

  • Faster Payments.
  • CHAPS.

Some Alternate Ways

  • Direct Debit or Deposit.
  • BACS.
  • Credit Card payments.
  • Bank deposits directly at Bank.

Frequently Asked Questions about VAT Rate in UK

How Do I Work Out the VAT on a price?

If you want to determine the exact amount of VAT on any specific price, then you must follow these simple and easy steps as mentioned below.

  • First of all, you need to take the gross amount of any particular sum that includes the items involved in buying and selling. You have to divide the amount by 117.5(if the standard or current VAT rate is 17.5% at the time of calculation). However; if the current VAT rate is other than 17.5, then you have to add 100 to the VAT percentage rate and divide it by that number.
  • Once the result is displayed on your screen after doing the calculations in step 1, you have to multiply the result by 100. In this way, you will get the pre-VAT total value on your screen.
  • In the last step, you have to multiply the result by 17.5 to work out the exact VAT on any price.

What is the VAT on 100?

The exact VAT rate on any item that costs 100 pounds is 20%, which means that around 16.67 pounds will be deducted in terms of VAT from the total value. In this way, the net cost of the item will become 83.33 pounds. The simple answer to this question is 16.67 pounds.

How do you calculate cost price?

There are multiple ways to calculate the accurate cost price of any product. It also depends on whether the selling price and loss percentage is given or not. However; here are the two most commonly used formulas that you can use for both conditions.

For Given Selling Price and Profit Percentage
Cost Price: Selling Price x 100 / 100 + Profit Percentage.
For Given Selling Price and Loss Percentage
Cost Price: Selling Price x 100 / 100 – Loss Percentage.

How do I calculate VAT backward?

As per normal practices, the VAT in United Kingdom is usually added by the retailer to the purchase price for any sales of goods or services. However; in the reverse VAT collection, the purchaser is responsible to pay the VAT tax, and the calculation for this reverse VAT can be done with the following formula.

  • First of all, you have to convert the exact VAT rate into decimal format. It can be done by dividing the VAT percentage or rate by 100.
  • Now, you need to multiply the purchase price with the decimal figure and the VAT Reverse/Backward value will be displayed on the screen of your calculator.

Final Words – United Kingdom VAT Rates

We hope this article on VAT rate in UK has provided you most authentic information about how much is VAT in UK in 2021. Remember, calculating the correct VAT UK amount is a very hectic process that requires a lot of attention and relevant knowledge. We will recommend using any reliable VAT Tax Calculator to avoid making any mistakes. If you have any questions in your mind about UK value-added tax rate, don’t hesitate to comment below or email us anytime.

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