Know all about the rise in hmrc vat rates from the coming year

In case you have a running business in the United Kingdom or plan to start one you then ought to know all about the increase in hmrc vat rates from the coming year. This should help you to quickly incorporate all of the necessary modifications to your vat invoices and vat returns, and help you to keep on running your business without any interruptions.

Much like most other Countries in Europe, the United Kingdom too has embraced vat or value added tax to be a system for avoiding double taxation on goods and reducing tax leaks. In case your current taxable sales exceed £70,000 pounds in the past Yr then you can apply for vat registration and turn a vat registered dealer. This move will enable you to obtain a vat number that will need to be mentioned in each vat invoice that you issue to the customers. This vat invoice may also have to mention 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 standard vat rate is 17.5% that is slated to raise to 20% from January 4, 2011. You’ll thus have 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 remain similar to well as the zero vat rate. Vat exempt rates and classifications too are slated to stay exactly the same. To be on the safe side, you should however, ask your vat agent or consultant to remain glued to all alterations in uk vat in addition to eu vat rules, particularly 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 will be changed to include the change in standard vat rates. However, for those who have already paid vat on products or services in another country before these were imported into the UK then you will still be able to request vat reclaim by filling out the requisite vat form. In case of any doubts you could visit the hmrc vat website whilst utilizing various vat online services provided by the department. Several other eu countries too have either raised or plan to raise vat rates in the future as numerous countries had offered special rates to tide over the economic slowdown.

It’s 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 will 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 during 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 lead to a marginal rise in costs. However, this change will also have to get reflected in coming vat returns and calculations. You should make an effort to know all about the increase in hmrc vat rates in the coming year so that your business carries a seamless transition to the New Year.