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

In case you have a running business in the United Kingdom or plan to start one you then ought to know all about the increase in hmrc vat rates in 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 any interruptions.

Just like most other Countries in Europe, the United Kingdom 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 in the past 12 months then you can make an application for vat registration and turn a vat registered dealer. This move will enable you to obtain a vat number that will need 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 as well as your vat returns too will need to mention all applicable vat rates and amounts in greater detail.

Currently, the UK has 3 vat rates as decided by the hm revenue and customs department or the hmrc. The standard vat rates are 17.5% that is slated to increase to 20% from January 4, 2011. You will thus have to issue tax invoices using the new standard rates from January 4, 2011 onwards as well as file your vat return based on 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 remain exactly the same. In order to be secure and safe, you need to however, ask your vat agent or consultant to remain glued to any or all changes in uk vat in addition to eu vat rules, particularly if you import services or goods from member EU countries that follow vat.

Come January 4, 2011 and the vat threshold limit, and the flat rate vat scheme limit too will be changed to incorporate the modification in standard vat rates. However, for those who have already paid vat on goods and services in another country before they were imported into the UK then you will still be in a position to request vat reclaim by completing the requisite vat form. In case of any doubts you can always visit the hmrc vat website while also utilizing various vat online services offered by the department. Other eu countries too have either raised or plan to raise vat rates in the future as many 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 own business before, during and after the change in vat rates. This will help you to file for your vat returns correctly while also charging revised vat rates to your customers. You may anyway also disclose any errors that may have been committed through the transition period to the hmrc department and also make necessary adjustments within your next vat return as specified by 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 variation will also have to get reflected in coming vat returns and calculations. You should make an effort to be aware of everything about the increase in hmrc vat rates in the coming year so your business has a seamless transition to the New Year.