Regno UnitoManual

The UK has a standard VAT rate and one reduced VAT rate. In addition, a number of items are zero rated

IVA in Regno Unito

United Kingdom VAT rates

The UK has a standard VAT rate and one reduced VAT rate. In addition, a number of items are zero rated. The following VAT rates are currently applicable:

  • Standard rate: 20%
  • Reduced rates: 5% and 0%

UK has opted for the reduced on a number of items allowed by the VAT Directive. Super-reduced rates do not apply in UK (source: European Commission):

Vat Tax in UK

  • Foodstuff
    0% and 20%
  • Water supplies
    0%
  • Pharmaceutical products
    0% and 20%
  • Medical equipment for disabled persons
    0%
  • Children´s car seats
    5%
  • Passenger transport
    0%
  • Books
    0%
  • Books on other physical means of support
    0% and 20%
  • Newspapers
    0%
  • Periodicals
    0%
  • Admission to cultural services (theatre, etc)
    20%
  • Admission to amusement parks
    20%
  • Pay TV / cable
    20%
  • TV licenses
    Ex
  • Writers / composers
    20%
  • Hotel Accommodation
    20%
  • Restaurant and catering services
    20%
  • Restaurants
    20%
  • Admission to sporting events
    20%
  • Medical and dental care
    Ex
  • Shoes and leather goods
    20%
  • Clothing and household linen
    20%
  • Hairdressing
    20%

UK VAT Deduction limits

Input VAT can generally be deductible if the goods or services are used for business purposes. There are however certain items that are never deductible.

The below list provides detail on deduction rules for each type of expense:

  • Input VAT on hotel accommodation or restaurant meals is 100% deductible provided the expense is incurred for business purposes by employees of the company
  • Input VAT on conferences, fairs and exhibitions is 100% deductible provided the expense is incurred for business purposes by employees of the company
  • Business gifts are 0% deductible
  • Car rental, car repair and fuel expenses are 50% deductible where the expenses is connected to both, business and personal purposes. If wholly and entirely for business purposes, then VAT can be deducted at 100%
  • Taxi, train and other transport expenses is 100% deductible provided the expense is incurred for business purposes
  • Entertainment client expenses are generally 0% deductible unless they are provided to overseas customers

Deducting VAT prior to the beginning of the economic activity is only allowed on certain items. These include services supplied within six months before the registration date and VAT incurred on stock items that remain on stock on the date of registration. For more information, please read Regulation 111 of VAT regulations. 

UK Statute of limitations

Input VAT should be claimed in a VAT return filed no later than the end of the fourth year following the year during which the deductible VAT was due.

The time limit on the obligation to pay VAT is also four years. In case of fraud or deliberate failure to comply with VAT obligations, this period can be extended up to 20 years.

UK tax point rules

The tax point is the time when VAT becomes due. VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs. VAT is payable between the day after the end of the reporting period and the due date to submit and pay the VAT return.

  • General rule: Tax point arises when the goods are placed at the disposal of the customer or when the services are completed
  • Prepayments or advanced payments create a tax point. In these cases, VAT is due when the prepayment is made. Exceptions apply to security deposits
  • If an invoice is issued either before or 14 days after the time of supply, the date of payment or the date of the invoice (whichever is earlier) is deemed to be the tax point. Taxpayers can apply for an exception to this rule
  • Intra-Community acquisitions: Tax point occurs on the invoice date or the 15th day of the following month, whichever happens earlier.
  • Import: Tax point occurs when the goods are imported according to the relevant import documents

 

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