You can only charge 20% VAT if your business is registered for VAT.
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
5. Items sold to staff – eg canteen meals
6. Business goods used for personal reasons
7. ‘Non-sales’ like bartering, part-exchange and gifts
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.
Most goods and services are standard rate. You should charge this rate unless the goods or services are classed as reduced or zero-rated.
When to charge this rate can depend on the item being provided but also the circumstance of the sale.
Zero-rated means that the goods are still VAT-taxable, but the rate of VAT you must charge your customers is 0%.