Know everything about the increase in hmrc vat rates from the coming year

If you have a running business in the UK 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 the necessary changes in your vat invoices and vat returns, and help you to keep on running your enterprise without interruptions.

Much like other Countries in Europe, the UK too has embraced vat or value added tax to be a system for avoiding double taxation on goods and reducing tax leaks. If your current taxable sales exceed £70,000 pounds during the past 12 months you’ll be able to make an application for vat registration and turn into a vat registered dealer. This move will enable you to obtain a vat number which will have to be mentioned in each vat invoice that you issue to your customers. This vat invoice will also have to say 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 regular vat rates are 17.5% that is slated to raise to 20% from January 4, 2011. You will thus need to issue tax invoices using the new standard rates from January 4, 2011 onwards and also file your vat return in line with the new vat rates. The lower vat rate of 5% is slated to remain similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to stay the same. To be secure and safe, you should however, ask your vat agent or consultant to stay glued to any or all changes in uk vat in addition to eu vat rules, especially if you import goods or services 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 incorporate the change in standard vat rates. However, in case you have already paid vat on goods and services abroad before they were imported into the UK then you will be in a position to request vat reclaim by filling out the requisite vat form. In case of any doubts you can always visit the hmrc vat website whilst 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’s thus important that you clearly understand the implications of increased vat rates on your business before, during and following 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 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 specified by them.

The increase in standard vat rates from 17.5% to 20% from January 4, 2011 will result in a marginal increase in costs. However, this change will also have to get reflected in coming vat returns and calculations. You need to make it a point to know all about the rise in hmrc vat rates within the coming year so your business carries a seamless transition into the New Year.