VAT and Making Tax Digital

If you act as an agent, your turnover is your commission. If you act as a principal, your turnover is the whole amount the customer pays you, even though most of it goes straight back out to a supplier. That single distinction decides whether you cross the £90,000 VAT registration threshold and what VAT you charge. This guide sets out the agency test, the boundary between disbursement and recharge, and all eight HMRC conditions that a payment must meet to sit outside the value of your own supply.

The disposal of the remains of the dead, and the arrangements made for it, are exempt from VAT under VATA 1994 Schedule 9 Group 8. The commemorative goods that sit alongside a funeral, flowers, headstones, memorials and newspaper announcements, are standard rated at 20%. A single funeral invoice therefore normally carries both treatments and needs apportioning, and because the main supply is exempt the business cannot recover the VAT on the costs behind it. This guide sets out the rule, the boundary, the apportionment problem and the partial exemption consequence for a funeral business.

Insurance premium tax (IPT) is charged on general insurance premiums at a standard rate of 12% and a higher rate of 20%, both unchanged since 1 June 2017 and both unchanged by Finance Act 2026. IPT is not VAT. Insurance is a VAT-exempt supply, so there is no input tax on a premium and none of the IPT is recoverable on a VAT return. This guide sets out the rule in Finance Act 1994 Part III, the boundary between the two rates, car insurance premium tax and health insurance premium tax, worked figures, the exemptions, and the errors that cost businesses money.

You can join the VAT Cash Accounting Scheme if your estimated VAT taxable turnover for the next 12 months is £1.35 million or less, and you must leave once your VAT taxable turnover exceeds £1.6 million. Those are VAT figures and they belong to a VAT scheme. The income tax cash basis is a different regime with no turnover threshold of any kind since 6 April 2024. This page sets out the two entry and exit numbers, what the scheme does to a VAT return, the bad debt relief that is the real reason to join, and the catch-up that hits you on the way out.

An exempt supply carries no VAT, but exemption is not zero-rating. Exemption blocks recovery of the VAT on the costs behind the sale, and exempt turnover does not count toward the £90,000 registration threshold. This guide sets out the sixteen Schedule 9 groups, the difference between exempt, zero-rated and outside the scope, the standard method for partial exemption, and the de minimis limit, including the two different 50% tests that businesses routinely mix up.

A business normally cannot reclaim the VAT on buying a company car. The input tax block sits in article 7 of the VAT (Input Tax) Order 1992, and it bites where the car is merely available for private use, not only where private use actually happens. This guide sets out the rule, what counts as a car for VAT, the availability trap that catches more businesses than any other motoring rule, the exceptions that genuinely lift the block, the 50% leasing position, repairs and maintenance, and the road fuel scale charge.

Education supplied by an eligible body is exempt under Schedule 9 Group 6 of the VAT Act 1994. Finance Act 2025 carved private schools out of that exemption, so independent school fees and boarding have been standard-rated at 20% for supplies made on or after 1 January 2025, with an anti-forestalling rule reaching back to 29 July 2024. The private tuition exemption for an individual teacher acting independently was not touched. This guide sets out both halves, the preserved carve-outs for nursery classes, English as a foreign language and higher education, the welfare route that registered childcare runs on instead, and what exemption costs a provider in lost input tax.

There is no VAT saving on buying an electric car: the input tax block treats an EV exactly like a petrol or diesel car. The part that genuinely differs is charging, and the rules split four ways depending on who is charging and where.

Where a business leases a car that is available for any private use, only 50% of the VAT on the lease charge can be recovered. The other 50% is blocked to cover private use and it does not move with business mileage. Maintenance supplied and invoiced as a separate supply sits outside the block, and its VAT is recoverable in full. This guide sets out where the rule comes from, exactly what the 50% catches, the maintenance carve-out that the invoice wording decides, excess mileage and early termination, and the errors that quietly cost money every month.

Most membership subscriptions carry VAT at 20%. Two exemptions cut across that. Schedule 9 Group 10 exempts sporting services supplied by an eligible body to individuals actually taking part in sport, and Schedule 9 Group 9 covers subscriptions to trade unions, professional and other public interest bodies. This guide sets out the four cumulative eligible-body conditions, the boundary between a playing and a social membership, the apportionment a mixed club has to make, and the partial exemption consequence that usually costs a club more than the VAT it saves.

Printed matter is zero rated when it is reading matter, so books, leaflets, brochures, newspapers and journals carry no VAT. Stationery and anything designed to be written on or completed in use is standard rated at 20%, which is why a single print invoice often shows both rates. This guide sets out VATA 1994 Schedule 8 Group 3 item by item, the 2020 extension of the zero rate to electronic versions, the boundary at product level, and why a jobbing printer is usually in a VAT repayment position.

Whether a car carries VAT depends entirely on how the seller acquired it. A new car always carries 20% VAT on the full price. A used car bought by a dealer from a private seller usually runs the second-hand margin scheme, where the VAT is one-sixth of the dealer's margin and no VAT appears on the invoice at all. A VAT-qualifying used car carries 20% on the full price like a new one. This guide sets out the three treatments side by side, the stock book that the margin scheme depends on, the rule that each margin stands alone, and what a private buyer actually pays.

VAT on transport turns on the size of the vehicle, not the kind of journey. Passenger transport is zero rated, not exempt, where the vehicle, ship or aircraft is designed or adapted to carry not less than 10 passengers. Buses, coaches, trains and larger minibuses carry no VAT on the fare, while taxis, private hire cars and minicabs fall under the count and are standard rated at 20%. Because the treatment is zero rating rather than exemption, a coach or bus operator recovers VAT on vehicles, fuel and maintenance and is usually in a repayment position.

The VAT Retail Export Scheme was withdrawn in Great Britain with effect from 1 January 2021, together with the airside tax-free shopping concession. A shop in England, Scotland or Wales cannot refund VAT to an overseas visitor who carries goods home. The scheme continues to operate in Northern Ireland. This page sets out what went, what remains, and the different route open to a Great Britain retailer that ships goods overseas itself.

Zero rated VAT means VAT is charged at 0%. The supply is still a taxable supply, so the seller registers, files returns and recovers the VAT on costs. Exempt supplies are outside the taxable base entirely, so there is no VAT on the invoice and none of the VAT on costs comes back. This guide sets out the Schedule 8 zero-rating categories, the boundary against exemption trade by trade, why zero-rated sellers usually want to be registered, and why insurance is exempt rather than zero-rated.

A VAT-registered shop selling goods at more than one rate can compute output VAT three ways. This page runs point of sale, apportionment and direct calculation over one shop's identical quarter of takings, shows the three different VAT bills that result, and sets out the daily gross takings record every scheme depends on.

A car bought for £7,000 and sold for £8,500 carries a £1,500 margin and £250 of VAT, because the margin scheme charges one-sixth of the margin rather than one-sixth of the price. This page runs that calculation in full, then the loss-making car, the car bought on a VAT invoice, and the stock book records that are the only thing keeping the scheme in place.

The VAT registration threshold for 2026/27 is £90,000 of taxable turnover in any rolling 12-month period (raised from £85,000 on 1 April 2024 under VATA 1994 Sch 1). Exceed it and you have 30 days to notify HMRC; your effective registration date is the first day of the second month after you went over. This guide explains the rolling test in full, works through a complete numeric example, covers the flat rate scheme and the deregistration threshold, and sets out what happens if you miss the deadline.

Every VAT-registered UK business must file a VAT return each tax period using MTD-compatible software. This guide walks through all nine boxes, shows a worked example with real figures flowing through every box, covers the submission deadline and payment options, and explains what to do if you find an error after submitting.

A VAT calculation calculator helps you work out the VAT on sales and purchases quickly. This guide covers how to use one, the different rates that apply, and when you might need a more specialised method like the Direct Calculation Scheme.

A practical guide to using a VAT calculator for UK businesses. Covers how to add and remove VAT manually, when registration is compulsory, and how Making Tax Digital affects your returns.

A practical guide to calculating VAT in the UK. Covers the three main rates (20%, 5%, 0%), the formulas for adding and removing VAT, and how to handle exports. Real examples throughout.

A VAT tax calculator helps you work out what you owe HMRC, whether you use the standard scheme or the flat rate scheme. We explain how the calculations work, what rates apply to your sector, and how to handle export sales.

Selling on Amazon FBA from the UK means dealing with UK VAT, international stock, FBA fees, and HMRC deadlines. This guide covers what to look for in an accountant for Amazon FBA sellers, including VAT registration, stock valuation, and corporation tax planning.

Dropshipping businesses face unique accounting challenges around VAT, stock valuation, and cross-border trade. This guide covers what to look for in an accountant for dropshippers, including VAT registration thresholds, MTD for ITSA, and how to handle supplier payments correctly. If you run a UK-based dropshipping business, here is the practical guidance you need.

Running an ecommerce business means dealing with VAT thresholds, stock accounting, cross-border sales, and platform reporting rules. A specialist accountant for ecommerce business handles these so you don't have to.

Running a restaurant or cafe means managing VAT on food, tips, payroll for front-of-house and kitchen staff, and tight margins. A specialist accountant for restaurants knows these challenges. Here is what to look for and how the right support changes your bottom line.

Flat rate VAT and standard VAT work very differently. This guide compares both schemes using real numbers, explains the limited cost trader rules, and helps you decide which one fits your business model.

MTD for Income Tax Self Assessment (ITSA) goes live in April 2026 for sole traders and landlords with qualifying income over £50,000. If you still use paper records or spreadsheets, this month-by-month checklist tells you exactly what to do and when. Our specialist team breaks down the preparation timeline.

From April 2026, Making Tax Digital for Income Tax (MTD ITSA) will require self-employed individuals and landlords with income over £50,000 to keep digital records and submit quarterly updates to HMRC. A making tax digital accountant helps you set up compatible software, manage those quarterly filings, and avoid penalties. Here is exactly what the change means and when you need specialist support.

Many articles claim mixed-member partnerships must comply with Making Tax Digital for Income Tax Self Assessment from April 2026. That claim is incorrect. HMRC has deferred all partnerships from the current mandate. Here is what the deferral means for your partnership and what individual partners with their own separate income still need to do.

There is a widely repeated claim that partnerships with corporate members face an MTD ITSA mandate from April 2026. It is not correct. HMRC has deferred all partnerships from the current rollout. This article explains what the deferral means, how corporate partners are taxed under the existing rules, and what individual partners should check for their own personal position.

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) goes live from April 2026. It requires quarterly digital reporting to HMRC for self-employed individuals, sole traders, and landlords with qualifying income above £50,000. Here is exactly who is affected, what software you need, and what to do between now and the deadline.

The domestic reverse charge for construction services shifts VAT responsibility from subcontractor to contractor. If you work in the building trade through a limited company, partnership, or as a sole trader, these rules affect how you invoice, what you charge, and how you file your VAT return. This guide explains who it applies to, what changes on your invoices, and how to avoid the most common mistakes.

If you import goods from outside the UK, standard VAT advice won't cut it. You need a VAT accountant who understands postponed VAT accounting, customs valuation, and C79 certificate reconciliation. This article explains exactly what they do and why it matters for your cash flow and compliance.

Importing goods from outside the UK creates specific VAT obligations that go far beyond standard domestic rules. A VAT accountant helps you use postponed VAT accounting correctly, manage customs declarations, and avoid penalties. Here is exactly what they do and when you need one.

The HMRC VAT Flat Rate Scheme lets you pay a fixed percentage of your VAT-inclusive turnover instead of tracking input and output VAT. The limited cost trader rule pushes most service businesses onto 16.5%, which is usually worse than standard accounting. This guide sets out the current sector rates, the join and leave thresholds, the first-year discount, and worked break-even examples so you can run your own numbers.

HMRC opens thousands of VAT compliance checks each year. A specialist VAT accountant handles the evidence gathering, correspondence, and representation so you can keep running your business. Here is exactly what happens behind the scenes.

VAT registration is compulsory once your taxable turnover exceeds £90,000 in any rolling 12-month period. But there are also voluntary reasons to register. Here's what triggers the requirement, how the process works, and when you should get VAT registration help from an accountant.

Seasonal businesses face a specific VAT registration trap. The £90,000 threshold is measured on a rolling 12-month basis, not a tax year. If you run a business with six months of near-zero income followed by a peak season, you can hit the threshold mid-season and owe VAT on income you have already spent. This guide explains when you must register, when you should consider voluntary registration, and how to avoid the cashflow crunch.

If you sell zero-rated goods (food, books, children’s clothing, etc.), the standard £90,000 VAT threshold still applies. But you may benefit from voluntary registration to reclaim VAT on your purchases. We explain when to register for VAT, the cashflow impact, and how to avoid the common pitfalls.