Value Added Tax
| Standard rate (1/6 of VAT-inclusive price) | 20% |
| Tourism and hospitality sector reduced rate | |
| – up to 30.9.21 | 5.0% |
| – from 1.10.21-31.3.22 | 12.5% |
| Registration level from 1.4.2017 | £85,000 per annum |
| Deregistration level from 1.4.2017 | 83,000 per annum |
Most businesses above the registration threshold must comply with the Making Tax Digital requirements.
Flat Rate Scheme (FRS)
| Annual taxable turnover to enter scheme | Up to £150,000 |
| Must leave scheme if annual gross turnover | Exceeds £230,000 |
If using FRS, the VAT paid by the business is a fixed percentage (based on business category) of 'FRS turnover' rather than the net of output tax over input tax. Input tax is usually not recoverable.
Cash accounting and Annual accounting schemes
| Annual taxable turnover to enter scheme | Up to £1.35m |
| Must leave scheme if annual taxable turnover | Exceeds £1.60m |