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Registered businesses charge Value Added Tax (VAT) on their sales. This is known as output VAT and the sales are referred to as outputs.
Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT.
There are three rates: standard which applies to most goods and services, reduced rate for some goods and services such as home energy and zero rate goods and services, for example, most food and children's clothes.
Some supplies are exempt from VAT for example postage stamps, financial and insurance transactions.
A business is required to register for VAT if the value of taxable supplies exceeds the annual registration limit.
Standard: 20%
Reduced: 5%
Annual Registration Limit (1.4.25 to 31.3.26): £90,000
Annual Deregistration Limit (1.4.25 to 31.3.26): £88,000
17 Sep 2025
UK firms are still under pressure after the annual rate of inflation remained at 3.8% in August, the British Chambers of Commerce (BCC) has warned.
16 Sep 2025
The government has launched a voluntary repayment scheme to allow recipients of financial Covid support to repay outstanding money they were not entitled to or did not need with 'no questions asked'.
15 Sep 2025
Chancellor Rachel Reeves will look at fixing the cliff edges in business rates that can discourage small business investment and growth, according to a report from HM Treasury.
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