Know everything about the rise in hmrc vat rates in the coming year

In case you have a running business in the United Kingdom or plan to start one then you ought to know all about the rise in hmrc vat rates in the coming year. This will help you to quickly incorporate all of the necessary modifications to your vat invoices and vat returns, and enable you to carry on running your business without interruptions.

Much like most other Countries in Europe, the UK too has embraced vat or value added tax as a system for avoiding double taxation on goods and reducing tax leaks. In case your current taxable sales exceed £70,000 pounds during the past 12 months then you can make an application for vat registration and turn into a vat registered dealer. This move will allow you to obtain a vat number that will have to be mentioned in each vat invoice that you issue to your customers. This vat invoice may also have to mention the vat rate charged and your vat returns too will have to mention all applicable vat rates and amounts in greater detail.

Currently, the United Kingdom has 3 vat rates as decided by the hm revenue and customs department or the hmrc. The standard vat rates are 17.5% which is slated to raise to 20% from January 4, 2011. You’ll thus need to issue tax invoices with the new standard rates from January 4, 2011 onwards as well as file your vat return based on the new vat rates. The reduced vat rate of 5% is slated to stay the same as well as the zero vat rate. Vat exempt rates and classifications too are slated to stay the same. In order to be secure and safe, you should however, ask your vat agent or consultant to remain glued to any or all changes in uk vat as well as eu vat rules, particularly if you import goods or services from member EU countries that follow vat.

Come January 4, 2011 and the vat threshold limit, and also the flat rate vat scheme limit too might be changed to include the modification in standard vat rates. However, for those who have already paid vat on goods and services in another country before they were imported into the UK then you’ll still be in a position to ask for vat reclaim by completing the requisite vat form. In case of any doubts you could go to the hmrc vat website whilst utilizing various vat online services provided by the department. Several other eu countries too have either raised or plan to raise vat rates in the near future as numerous countries had offered special rates to tide over the economic recession.

It’s thus important that you clearly understand the implications of increased vat rates on your own business before, during and after the change in vat rates. This will help you to file your vat returns correctly while also charging revised vat rates to the customers. You can anyway also disclose any errors that may have been committed through the transition period to the hmrc department and also make necessary adjustments in your next vat return as per them.

The increase in standard vat rates from 17.5% to 20% from January 4, 2011 will lead to a marginal increase in costs. However, this change may also have to get reflected in coming vat returns and calculations. You should make it a point to be aware of everything about the rise in hmrc vat rates in the coming year so your business carries a seamless transition to the New Year.

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