VAT, Value Added Tax, VAT Limit, VAT Registration, VAT Road Fuel Scale Charges.

VAT Questions Answered

What are the current VAT limits?

VAT registration is compulsory above £58,000 turnover (for the current tax year 2004 / 2005) per year turnover (or sales) or commision paid to you if you are acting as a commission agent, although you can register voluntarily at any time before that limit is reached.

Should I register for VAT even though I have not reached £58,000 turnover?

The simple rule of thumb is this - if you are providing your service or product for non-VAT registered members of the public, or small companies, where there is a 'market limit' on your selling price then it is often best not to. Whereas if you are dealing with VAT registered companies you may find it beneficial to do so

For example: if you are buying a product for £10.00 plus VAT and selling it to members of the public for £100.00 then the following will apply:

Not VAT reg. selling to public	Buy for 11.75 (inc VAT) can't reclaim VAT	Sell at 100.00 (no VAT to repay)	Profit £88.25
Not VAT reg. selling to VAT reg companies	Buy for 11.75 (inc VAT) can't reclaim VAT	Sell at 100.00 (no VAT to repay)	Profit £88.25
VAT reg. selling to public	Buy for 11.75 (inc VAT) can reclaim VAT	Sell at 100.00 (but you pay VAT out of this)	Profit £75.11
VAT reg. selling to VAT reg. companies	Buy for 11.75 (inc VAT) can reclaim VAT	Sell at 117.50 (cust. reclaims VAT)	Profit £90.00

What are Road Fuel Scale Charges and what are the current limits

When you are VAT registered you may reclaim VAT on the business portion of any fuel used during the execution of your business, so long as you have a VAT receipt. However you must pay a Scale Charge per vehicle as shown in the following table (correct as at 6th April 2002)

The first 4 columns are an annual scale charge, the second 4 are a quarterly and the last 4 are the monthly scale charges for diesel and petrol respectively.

	Scale Charge Diesel	VAT due per car	Scale Charge Petrol	VAT due per car	Scale Charge Diesel	VAT due per car	Scale Charge Petrol	VAT due per car	Scale Charge Diesel	VAT due per car	Scale Charge Petrol	VAT due per car
1400cc or less	850	126.29	905	134.78	212	31.75	226	33.65	70	10.42	75	11.17
1400cc - 1999cc	850	126.29	1145	170.53	212	31.75	286	42.59	70	10.42	95	14.14
2000cc +	1075	160.10	1690	251.70	268	39.91	422	62.85	89	13.25	140	20.85

How do I calculate what VAT to add or take off products?

Use the VAT Calculator supplied as part of the resources of this site. To access click here now.

I am already VAT registered as a Sole Trader and I am starting a new business with a Partner - does this business have to be VAT registered also?

Not necessarily. If you and some other person intend to co-operate in making supplies as a joint venture this may constitute a partnership which would be a new and separate person for VAT purposes. However you are strongly advised to agree the VAT position with your local VAT Business Advice centre before trading.

What evidence do I need to reclaim VAT on things I buy for the business?

In order to reclaim VAT you must have a VAT invoice - Invoices marked 'pro-forma' or THIS IS NOT A TAX (OR VAT) INVOICE' will not be sufficient evidence and may not be used - so make sure that you get a VAT invoice for what you buy (even at a Cash & Carry)