Vat’s it all about?

By law, a business has to register for Vat when their sales reach £73,000 or it’s likely that they will in a calendar year. But what is Vat?

Basically it’s a tax on goods & services. But not all goods & services. So if you sell children’s clothes or books & magazines vat’s not applicable. But it is on adults clothes!

The standard rate of Vat in the UK is 20%, which means that if you are selling a product for £1,000 then you have to add Vat of £200 making your total sales price £1,200. Many people forget about Vat when they’re pricing their goods & services.

As a Vat registered business you have to prepare quarterly Vat Returns (although the are annual schemes for certain types of business). On your return you calculate the net amount of Vat you have to pay over to HMRC by deducting Vat that you’ve been charged on goods & services that you have bought from the total amount of Vat on your sales for that quarter. Confused? Watch a short video here.

Many people now take advantage of the Flat Rate Vat Scheme, which makes the administration of vat much simpler. It works very well for particular types of businesses, such as contractors, and most will actually make a profit from it. How cool is that – making profit on tax!!

At Freelance World we work with many clients who are Vat registered. We help simplify the process for our clients, and have recently put in place a fantastic scheme with Enterprise North East Trust where ENET will pay the first three months of Freelance World’s fees for any new businesses registering for Vat. Free Accountancy! Worth up to £600!

All you have to do is be in the first three months of trading, have not registered for Vat yet, and not be a current client of ENET.

If you meet those criteria, or you know someone else who does, then get in touch with Freelance World right away.

Our Accountancy Packages

Choose from a choice of three fixed-fee packages, each one designed to suit how 'hands-on' you would like to be in the day-to-day administration of your company.

Standard Package

Provides all key Limited Company support services that an experienced contractor requires - ensuring low costs but leaves you with the responsibility of making all HMRC payments.

+VAT/month Find out more >>

Standard Plus Package

All the benefits of our Standard Package plus Initial IR35 Contract Review, Annual Tax Planning Review and Second Shareholder Personal Tax Return.

+VAT/month Find out more >>

Premier Package*

Our most popular service, 83% of our clients enjoy the all- inclusive support that this option provides. We take care of everything on your behalf – you won’t find a more complete service anywhere.

+VAT/month Find out more >>