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VAT

NOTE: In light of the January 1st 2010 VAT increase, we have prepared a notice for stores informing customers that price marking may be different to actual sales prices. To download a VAT Notice for your store, click here:  VAT Notice 


VAT is a tax on consumer expenditure. It is collected on business transactions, imports and acquisitions.
Most business transactions involve supplies of goods or services.

 VAT is payable if they are:
  • supplies made in the United Kingdom (UK) or the Isle of Man
  • by a taxable person
  • in the course of a business
  • are not specifically exempted or zero-rated. 

VAT rates

There are 3 rates of VAT: 

  • a standard rate, currently 17.5%
  • a reduced rate, currently 5%
  • a zero rate.
Registering for VAT

If the value of your taxable supplies is over a specific limit (currently £64,000), you need to register for VAT, unless your supplies are wholly or mainly zero rated in which case you may apply for exemption from registration. You can register online using the HMRC’s VAT online registering service here.  

Once you have registered you need to charge VAT on all your taxable supplies from your date of registration and keep:

  • a record of all standard-rated goods and services you supply or receive as part of your business
  • a separate record of any exempt supplies you make
  • a VAT account.

At preset intervals you need to fill in a VAT Return with details of your sales and purchases. You can do this online or using a paper return.

If the VAT on your sales is more than the VAT on your purchases you pay HMRC the difference. On the other hand, if the VAT on your purchases is more than the VAT on your sales you can claim the difference from HMRC.

Flat Rate Scheme

There is a flat rate scheme for small businesses to make it easier to pay VAT. If you use the scheme you apply a single percentage to your turnover in a VAT period. The result is the VAT you pay to HM Revenue & Customs. For more information on how the scheme works and whether you are eligible visit here.

Further information on VAT can be found here.