Use the VAT calculator to calculate VAT due on the sales of goods and services
Instructions:
| Goods/Service Description | Value | Vat Rate | Vat Charge | Total Price | Running Total | ||
|---|---|---|---|---|---|---|---|
| Exc. VAT | Inc. VAT | ||||||
Value Added Tax (VAT) is a tax that is applied against most services goods provided by VAT registered business in the UK.
How is VAT calculated? In order to calculate VAT you must apply a percentage of the goods/service to the orginal value.
VAT Calculation: v = s x r% where:
How much is VAT? VAT is categorised into three bands which are reffered to as rates. Typical language use: "VAT is payable at the Standard rate" meaning that 20% will be payable on the goods or service. The current VAT rates for the UK are shown in the table below.
| VAT Rate Name | VAT Rate % | VAT Rate Applies to |
|---|---|---|
| VAT Rates 2023/24 Tax Year | ||
| Standard | 20% | The majority of goods and services |
| Reduced rate | 5% | A minority of goods and service, typically to support government household initiatives, an example being home energy |
| Zero rate | 0% | Zero rated goods and services include food and childrens clothes |
The following calculations show how VAT is calculated in the UK.
How much VAT is due on electricity (for domestic and residential use or for non-business use by a charity)?
| Electricity Charge | VAT Rate % | VAT Amount | Total cost of electricity used |
|---|---|---|---|
| VAT Example 1 for 2023/24 Tax Year | |||
| £ 360.00 | 5% | £ 18.00 | £ 378.00 |
How much VAT is due on books, magazines, newspapers and publications? VAT on books et al is zero-rated so VAT is apllied at 0%.
| Book | VAT Rate % | VAT Amount | Total cost of book |
|---|---|---|---|
| VAT Example 2 for 2023/24 Tax Year | |||
| £ 7.99 | 0% | nil | £ 7.99 |
How much VAT is due on a new iPhone? VAT will be payable at 20% on a new iPhone
| iPhone | VAT Rate % | VAT Amount | Total cost of new iPhone |
|---|---|---|---|
| VAT Example 3 for 2023/24 Tax Year | |||
| £ 540.00 | 20% | £ 108.00 | £ 648.00 |
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If you run a business, you have to register for VAT when your tunrover exceeds the VAT threshold. This includes goods, services and any imports that you may be involved with as part of your business. The VAT Threshold for 2014/15 is £ 81,000.00.
You can voluntarily register for VAT if your turnover is less than the VAT theshold. This is beneficial to some companies but consider your options first. You will need to ensure you complete your VAT returns in a timely manner, the VAT man is normally neither flexability or understanding! If you do register for VAT, ensure you use a robust accountancy like Tempo Accounting. The accountancy then completes the VAT returns for you, removing potentail headaches and stress especially if you are a one person business.
The VAT registration number is a unique 9 digit number that will be issued to your registered business address once you succesfully been approved for VAT.
Most companies use their companies address as their VAT address though you may use your accountants address if they are handling all the VAT work for you. If this is the case you should ensure that all your VAT receipts are passed to your accountants with sufficient time to complete the periodic VAT return.
There are no costs associated with registering for VAT though an accountancy firm may charge your for their time and services if they file for VAT on your behalf.
HMRC has moved the najority of its services online now which have simplified business set up times and reduced set-up costs. You can register for VAT online but you must first have registered to use the Government Gateway. The Governement Gateway is a central portal that allows individuals and businesses to access a wealth of tax and payroll related tools. Registering to use the Government Gateway is free but validation codes can take several weeks to arrive.
Tax and accounting can seem overly complex, what most people need is VAT Returns explained in simple terms that allow correct registration, understanding of the VAT process and compliant and timely tax returns.
The deadline for submitting your VAT returns is normally one calendar month and seven days after the end of your VAT period, this will be displayed on your online return. You must submit your return so that HMRC receives it before the VAT deadline.
| Form No. | Form title | Form Description |
|---|---|---|
| VAT Forms for 2023/24 Tax Year | ||
| VAT 1 | VAT - Application for Registration | [Download Form] |
| VAT 1A | VAT - Application for Registration - Distance Selling | [Download Form] |
| VAT 1B | VAT - Application for Registration - Acquisitions | [Download Form] |
| VAT 1C | VAT Registration Notification | [Download Form] |
| VAT 2 | VAT - Partnership Details | [Download Form] |
| VAT 5L | VAT Registration - Land and Property | [Download Form] |
VAT Payments are typically paid quarterly as VAT Returns are made quaretely. You can request a non-standard VAT period.
You may also find the following contractor calculators useful for your salary and tax calculations.
If you are looking for accounting support with your new limited company or if you need support setting up your accounts as a contractor, iCalculator recommends Tempo, a solid, dependable company that the team at iCalculator have known and worked with since 2009.