VAT Manuals
VAT UK Guide

VAT UK Guide

Read our guide and find out everything you need to know about VAT in the UK, from registration to filing, and more.

Are you planning to expand your business into the United Kingdom but don’t know if you’ll need to register for VAT (Value Added Tax)? Then read our VAT rate UK guide where we explain how the VAT system works in the United Kingdom post-Brexit.

What is the VAT rate UK?

The UK has two VAT rates - a standard UK VAT rate of 20% and a reduced rate of 5%. Since leaving the European Union on January 1st, 2021, the UK is no longer subject to the EU VAT directive and now sets its own VAT rules and policies in full.

Many items, including books, newspapers, periodicals, children’s clothes, and passenger transport, are exempt from UK VAT.

Type of VAT VAT Rate Applicable Goods/Services
Standard VAT 20% Сertain products and services including foodstuffs, pharmaceuticals, pay TV/cable, restaurants and catering services, clothing, and admission to sporting events.
Reduced VAT rate 5% Includes children’s car seats, mobility aids for the elderly, heating equipment, and smoking cessation products such as nicotine patches and gum.
Zero rate VAT 0% Includes certain foodstuffs, pharmaceuticals, medical equipment, books, newspapers, and periodicals.

Registering for UK VAT

As a result of the UK’s exit from the European Union, the EU distant sales threshold for VAT registration no longer applies to sales to the UK. An exemption exists for goods sold between Northern Ireland and the EU, though this doesn’t include sales of services. So, for non-UK businesses, the obligation to VAT register begins from the first B2C sale.

You will be required to register for a UK VAT number if you store goods in a UK fulfillment center or warehouse, you sell to UK consumers from an EU country and have exceeded the £70,000 UK VAT threshold for distance selling, or you sell to UK consumers from a country outside the EU.

You can register for VAT UK online or you can do it by post. You should receive your UK VAT number and registration certificate from the HMRC within 30 days.

Fiscal representative UK

Under most circumstances, EU and non-EU businesses are not required to appoint a fiscal representative when registering for VAT in the UK.

UK VAT return filing and penalties

Your UK VAT return can be submitted monthly or quarterly. The majority of returns are made every three months, however, if a business’s annual VAT liability is over £2.3 million, payments due must be made on the last of the second and third months of each VAT quarter. 

The deadline for UK VAT submissions is one calendar month and seven days following the end of the previous accounting period.

If you submit your UK VAT return late you’ll receive a penalty point and once you’ve reached a penalty point threshold you’ll be fined £200. This threshold is set by your accounting period. A further £200 will be added for each subsequent late submission.

The penalty for late payment is 2% of the amount of UK VAT due for that reporting period. Late payment charges are levied if your payment is 16 or more days overdue. This increases to 4% when more than 31 days overdue.

UK Intrastat declarations

Following Brexit, businesses importing goods into the UK (excluding Northern Ireland) from the EU that exceed the threshold of £1.5m must submit an Intrastat report. Businesses exporting goods into the EU are no longer required to prepare Intrastat declarations. Any business moving goods between Northern Ireland and the EU (import and export) will be required to submit Intrastat returns if they exceed the threshold. The thresholds are imports exceeding £500,000 and exports exceeding £250,000.

Reverse charge in the UK

In the UK, the reverse charge mechanism is a VAT accounting procedure where the responsibility for reporting and paying VAT shifts from the supplier to the customer for certain goods and services. This applies to services purchased by UK VAT registered businesses outside of the UK. In this case, the customer, instead of the supplier, must account for the UK VAT on their VAT return.

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