Know everything about the rise in hmrc vat rates in the coming year

If you have a running business in the United Kingdom or plan to start one you then should know all about the increase in hmrc vat rates from the coming year. This should help you to quickly incorporate all of the necessary changes in your vat invoices and vat returns, and enable you to carry on running your business without interruptions.

Much like most other Countries in Europe, the UK too has embraced vat or value added tax to be 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 you’ll be able to apply for vat registration and turn a vat registered dealer. This move will allow you to receive a vat number which will have to be mentioned in each vat invoice which you issue to the customers. This vat invoice may also have to mention the vat rate charged as well as your vat returns too will need to mention all applicable vat rates and amounts in detail.

Currently, the United Kingdom has 3 vat rates as decided by the hm revenue and customs department or hmrc. The standard vat rates are 17.5% that is slated to raise to 20% from January 4, 2011. You’ll thus need 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 reduced vat rate of 5% is slated to stay the same as well as the zero vat rate. Vat exempt rates and classifications too are slated to stay the same. In order to be on the safe side, you should however, ask your vat agent or consultant to remain glued to all alterations in uk vat as well as eu vat rules, especially if you import services or goods from member EU countries that follow vat.

Come January 4, 2011 and the vat threshold limit, and also the flat rate vat scheme limit too will be changed to include the change in standard vat rates. However, in case you have already paid vat on products or services abroad before they were imported to the UK then you’ll be able to ask for vat reclaim by filling out the requisite vat form. In the case of any doubts you could go to the hmrc vat website while also 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 is thus essential that you clearly comprehend the implications of increased vat rates on your business before, during and following the alternation in vat rates. This should help you to file your vat returns correctly while also charging revised vat rates to your customers. You can anyway also disclose any errors that might have already been committed during the transition period to the hmrc department and even make necessary adjustments in your next vat return as specified by them.

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