A business is required to register for VAT if the value of taxable supplies exceeds the annual registration limit. The government has frozen the VAT registration and deregistration limits for two years from 1st April 2018.
Registered businesses charge VAT on their sales, this is known as output VAT. VAT is charged on most goods and services purchased by businesses, this is known as input VAT.
There are three rates:
Standard – which applies to most goods and services
Reduced rate – for services such as home energy
Zero rate – for example most food and children’s clothes.
Some supplies are exempt from VAT for example postage stamps, financial and insurance transactions.
Limits
Annual registration limit : £85,000
Annual deregistration limit : £83,000
Rates
Standard : 20%
Reduced : 5%