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A Guide to VAT

By 5th October 2021No Comments

VAT is applied to many goods and services, so it is an essential aspect of a business’s financial plans. Hiring accountants to manage your tax will ensure you are paying the correct amount to HMRC on time.

In this month’s blog at SM Vint & Co. we provide a guide to VAT (Value Added Tax). Contact our team in Banbridge on 02840 662 490 for more information.

What is VAT?

VAT (Value Added Tax) is the tax companies and consumers pay for goods and services. These charges can be applied to a range of sales, including:

  • Household Items
  • Clothes
  • Services

The standard rate of VAT in the UK is 20% which is applied to almost half of all products and services. However, there is a reduced rate of 5% for items such as sanitary products and home energy.

Some products and services are exempt or have a zero rate applied. These include books, children’s clothes, stamps and donated items in charity shops.

How it Works

Charging VAT encourages businesses to sell more and earn more money than a progressive income tax would. All prices for products in shops include the applied VAT, so companies that purchase items with the tax can reclaim it in their VAT returns.

There are many reasons you may need to file a tax return, including if you:

  • Own a Company
  • Have Large Amounts of Savings
  • Are Self-Employed
  • Have Rental Income

Accountants look through a company’s invoices and calculate their tax liability. Then, they complete the return and submit it to HMRC on time. Businesses can complete these forms themselves, but experts will ensure no mistakes are made, as if the returns are filed incorrectly, you could be liable for fines or potentially pay too much.

Find Out More

Contact our team at SM Vint & Co. in Banbridge for more information about VAT or expert advice. Call us on 02840 662 490 to consult a specialist. Alternatively, send us a message via email at enquiries@sm-vint.co.uk or through the contact form for a prompt response.

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