VAT
[noun] /viː eɪ tiː/.
Value Added Tax, additional tax you'll be charging your customers and liable to pay to HMRC, when your turnover is over £90,000
Glossary
Value Added Tax, additional tax you'll be charging your customers and liable to pay to HMRC, when your turnover is over £90,000
VAT (or Value Added Tax) is a tax which businesses charge their customers on certain goods and services.
When you're self-employed either as a sole-trader or a registered as a limited company, you can register voluntarily for VAT, but are required to register once your turnover is over £90,000.
VAT is generally charged to your customers at 20% on top of the price of the goods or services you sell (although there are many rules around what VAT rates are charged depending on the type of goods or services you sell).
If you are VAT registered, you can also claim back some of the VAT that you've paid on goods and services you've purchased for your business.
You are reguired to register within three months on crossing the £90,000 threshold, or within three months on knowing you're likely to do so.
If you are VAT registered, you'll need to be completing an additional VAT Return and paying your VAT every three months.
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