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Let's Toast to what's next: The Story behind our Brand refresh

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25

Sep

Let's Toast to what's next: The Story behind our Brand refresh

Let's Toast to what's next: The Story behind our Brand refresh

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25

Mar

5 Essential KPIs Every E-Commerce Business Owner Should Track for Success

5 Essential KPIs Every E-Commerce Business Owner Should Track for Success

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25

Mar

Upcoming changes that could affect your business

Upcoming changes that could affect your business

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Feb

Why Traditional Marketing Methods are no longer enough for Businesses

Why Traditional Marketing Methods are no longer enough for Businesses

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VAT: What is it and how does it affect my business?

VAT: What is it and how does it affect my business?

26

September

2024

VAT: What is it and how does it affect my business?

At this time of year, you might begin to hear talk of VAT,or Value Added Tax, a lot more on the news. This is because the Chancellor ofthe Exchequer announces their Autumn Budget at the end of October each year. Putsimply, the Chancellor is the member of the Government responsible for allthings money, and the budget is the governments plans for the U.K Economy,including taxation and spending. This guide will explain the basics of VAT, andhow it impacts the world of business.

Value Added Tax (VAT) registration in the UK is a mandatoryrequirement for businesses whose taxable turnover exceeds the currentregistration threshold. The current threshold is £90,000 in a rolling 12-monthperiod.

Once a business is registered for VAT, they are required tocharge VAT on all eligible goods and services that they provide to customers.VAT registration also allows businesses to reclaim any VAT that has been paidon business expenses, such as packaging, mileage or marketing to name a few.There are different VAT rates for specific goods and services, which you cansee below:

 

                                   % of  VAT           What  the rate applies to

Standard  rate      20%                      Most  goods and services

Reduced  rate      5%                     Some  goods and services, e.g. children's car seats and home energy

Zero  rate             0%                     Zero-rated  goods and services, e.g. most food and children's clothes

Exempt                                           Some things are totally exempt, like postage stamps

 

A VAT return needs to be submitted by all VAT registered businesses at regular intervals - this is usually quarterly. A VAT return details the VAT that has been collected from customers purchasing goods or services as well as detailing the amount of VAT paid on purchases that are business related. If the VAT amount charged on goods and services exceeds the amount of VAT paid on purchases for the business, this will result in a VAT liability which is owed to HMRC. If the business has paid more VAT on purchases than the amount charged to customers in the quarter, this will result in are fund being due from HMRC. The deadline for a VAT return to be submitted and paid is one month and 7 days after the relevant quarter has ended.

At Toast, our expert advice and cloud accounting services ensure that your businesses VAT returns will be hassle-free.

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