The current VAT percentages and the annual registration and deregistration thresholds.
Registered businesses charge Value Added Tax (VAT) on their sales. This is known as output VAT and the sales are referred to as outputs.
Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT.
There are three rates: standard which applies to most goods and services, reduced rate for some goods and services such as home energy and zero rate goods and services, for example, most food and children’s clothes.
Some supplies are exempt from VAT for example postage stamps, financial and insurance transactions.
A business is required to register for VAT if the value of taxable supplies exceeds the annual registration limit.
The government has frozen the VAT registration and deregistration limits until 1 April 2022.
Rates
Standard: 20% (unchanged from 2019/20)
Reduced: 5% (unchanged from 2019/20)
Limits
Annual Registration Limit (1.4.20 to 31.3.21): £85,000 (unchanged from 2019/20)
Annual Deregistration Limit (1.4.20 to 31.3.21): £83,000 (unchanged from 2019/20)
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