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Value-Added-Tax (VAT)
You can only charge 20% VAT if your business is registered for VAT.
What is VAT charged on?
VAT is charged on things like:
  1. business sales - eg when you sell goods and services
  2. hiring or loaning goods to someone
  3. selling business assets
  4. commission
  5. items sold to staff - eg canteen meals
  6. business goods used for personal reasons
  7. ‘non-sales’ like bartering, part-exchange and gifts
VAT-registered businesses:

  1. must charge VAT on their goods or services
  2. may reclaim any VAT they’ve paid on business-related goods or services

If you’re a VAT-registered business you must report to HM Revenue and Customs (HMRC) the amount of VAT you’ve charged and the amount of VAT you’ve paid.

There are 3 different rates of VAT and you must make sure you charge the right amount.

Standard rate
Most goods and services are standard rate. You should charge this rate unless the goods or services are classed as reduced or zero-rated.

Reduced rate
When to charge this rate can depend on the item being provided but also the circumstance of the sale.

Zero rate
Zero-rated means that the goods are still VAT-taxable, but the rate of VAT you must charge your customers is 0%.

For more information visit gov.uk/vat.

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