Know all about the increase in hmrc vat rates in the coming year

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

Just like 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 you’ll be able to apply for vat registration and turn a vat registered dealer. This move will enable 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 say the vat rate charged as well as your vat returns too will need to mention all applicable vat rates and amounts in detail.

Currently, the United Kingdom has 3 vat rates as decided by the hm revenue and customs department or the hmrc. The regular vat rate is 17.5% that is slated to increase to 20% from January 4, 2011. You’ll thus need to issue tax invoices with the new standard rates from January 4, 2011 onwards and also file your vat return based on the new vat rates. The reduced vat rate of 5% is slated to stay similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to stay vatverification the same. 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, especially if you import services or goods from member EU countries that follow vat.

Come January 4, 2011 and the vat threshold limit, and 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 products or services abroad before these were imported to the UK then you’ll still be in a position to request vat reclaim by filling out the requisite vat form. In case of any doubts you can always go to the hmrc vat website while also utilizing various vat online services offered by the department. Other eu countries too have either raised or plan to raise vat rates in the near future as many countries had offered special rates to tide over the economic slowdown.

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

The rise in standard vat rates from 17.5% to 20% from January 4, 2011 will result in a marginal rise in costs. However, this variation may also have to be reflected in coming vat returns and calculations. You should make an effort to be aware of all about the rise in hmrc vat rates in the coming year so your business has a seamless transition into the New Year.