Business News
A Quick Lesson in VAT
As the end of the financial year comes to a close, we take a quick look at the some of the most important aspects of Value Added Tax.
Did you know?
• If you sell mainly to businesses, it might be worth registering for VAT even if your turnover is less than the £67,000 threshold
• Your first VAT return can be used to reclaim VAT paid on stock you held when you first registered, as well as capital items such as computers and furniture and consumables bought six months before registration, e.g. when you were setting up the business
• If your turnover is less than £150,000, you may be able to register for the flat rate VAT scheme, which means you don’t have to calculate VAT on individual sales and purchase invoices
• Business can now qualify for automatic ‘bad debt relief’ on debts older than 6 months without the need to write to the debtor
• If your turnover is below £1,350,000, you may qualify for the annual cash and accounting schemes
• VAT can only be reclaimed on vehicles if there are NO windows or seats in the rear
• It’s only really worth claiming VAT on fuel if there is a high mileage involved, as the scale charge can often be higher than the VAT you get back
• If staff use their own cars and are paid on a pence by mile basis, VAT can be reclaimed at rates agreed by the VAT office, typically about 12p per mile depending on the engine size
• VAT can be reclaimed on maintenance and servicing on any private cars used for business purposes
• VAT can be reclaimed on gifts up to £15 per person per year
• Staff parties qualify for VAT in full as long as only staff attend
