Know everything about the increase in hmrc vat rates from the coming year

If you have a running business in the UK or intend to start one then you ought to know everything about the rise in hmrc vat rates from the coming year. This will help you to quickly incorporate all the necessary changes in your vat invoices and vat returns, and enable you to carry on running your enterprise without interruptions.

Just like most other European countries, the UK too has embraced vat or value added tax as a system for avoiding double taxation on goods and reducing tax leaks. If your current taxable sales exceed £70,000 pounds during the past 12 months then you can make an application for vat registration and turn a vat registered dealer. This move will allow you to obtain a vat number that will have to be mentioned in each vat invoice that you issue to your customers. This vat invoice may also have to mention the vat rate charged and your vat returns too will have to mention all applicable vat rates and amounts in greater 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 in line with the new vat rates. The lower 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. In order to be on the safe side, you need to however, ask your vat agent or consultant to stay glued to any or all changes in uk vat in addition to eu vat rules, especially 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 might be changed to incorporate the modification in standard vat rates. However, in case you have already paid vat on goods and services in another country before these were imported into the UK then you will be able to ask for vat reclaim by filling out the requisite vat form. In the 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 near future as numerous countries had offered special rates to tide over the economic recession.

It’s thus important that you clearly understand the implications of increased vat rates on your own business before, during and after the change in vat rates. This should help you to file 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 within your next vat return as per them.

The increase in standard vat rates from 17.5% to 20% from January 4, 2011 will lead to a marginal rise in costs. However, this change may also have to get reflected in coming vat returns and calculations. You should make an effort to be aware of all about the rise in hmrc vat rates in the coming year so that your business has a seamless transition to the New Year.