Get Vat1614j

You must start charging VAT on sales once you are a VAT registered trader. This can be as a consequence of either compulsory or voluntary registration. You must consider whether you are legally obliged to register for VAT (this is compulsory registration).

The option to tax is made on a property-by-property basis. So, the decision to opt to tax one property does not make other property taxable unless another election is made for other property as well. However, once is option is made for a property, it applies to the land as well as any building on that land.

Standard VAT Accounting In your VAT return, you'll need to list the VAT you've charged on your invoices for the applicable quarter and the VAT you've paid as part of your allowable business expenses and purchases. The difference between the two figures is what you'll owe to HMRC.

The standard VAT rate in the United Kingdom is 20%, which is applicable for most goods and services. However, for certain goods and services (e.g. Children's car seats, home energy) a reduced rate of 5% VAT can be applied. It is also possible to have 0% VAT on transactions (e.g. for most food and children clothes).

The option to tax allows a business to choose to charge VAT on the sale or rental of commercial property i.e. to make a taxable supply out of what otherwise would be an exempt supply. Any option to tax does not affect a residential building or residential part of a building.

The lease or sale of a commercial property is usually exempt from VAT i.e. the tenant or person buying the property doesn't have to pay VAT on it. Whilst generally a positive overall (reduces the cost of buying or renting a commercial property), the landlord or buyer cannot recover the VAT on all related costs.

The VAT threshold is the volume of annual turnover at which businesses are required to register for value-added tax (VAT). Registering for VAT is a legal requirement for businesses that exceed this threshold, and the threshold is reviewed regularly by HMRC.