This calculator will automatically calculate the VAT for you.
You simply need to enter the value into the respective rows put in the VAT percentage and you will have the total.
How to Calculate VAT?
If you wish to calculate excluding VAT the formula is
For example if we take the standard VAT of UK which is 20% and apply it on a product worth £300 excluding the VAT the original price of the product is £250 and the VAT on it is £50 making the total £300.
If you wish to calculate adding VAT the formula is.
For example if we take the standard VAT of UK which is 20% and apply it on a product worth £300 adding VAT to the original price of the product will make it cost £360 where £60 is the value of the VAT.
These equations are universal and apply for any and all VATs.
VAT registration threshold?Here is the VAT registration threshold; the limit that once exceeded a company must register for VAT, for all countries that uses VAT.
When to register for VAT?
VAT registration is the process of listing your business with the government as active in production and sales. VAT registration becomes mandatory when you reach your countries VAT registration threshold in order to avoid fines. VAT registration threshold is the amount that once a business exceeds it must register for VAT certificate. Those companies that have yet to reach this threshold have the choice to register whenever they feel like however, our suggestion is to register as early as possible. Those companies that are selling VAT-exempted goods and services do not need to register themselves for VAT.
Benefits of registering for VAT:
Once you are VAT registered, you don’t need to pay VAT on business expenses. You will still be charged the VAT included price when you purchase, but you can claim the money paid back when you file your return with HMRC.
Responsibilities of being a VAT registered:
- Charging the right amount of VAT on any goods or services sold.
- Paying any VAT due to HMRC
- Submitting VAT Returns
- Keeping VAT records and a VAT account.
How to register for VAT?You must register your business for VAT with HM Revenue and Customs (HMRC) if the turnover is more than your countries VAT registration threshold. Registration is a must for those businesses that have a turnover of more than their respective countries threshold and is voluntary for those who have yet to meet the threshold.
To register you need:
- A National Insurance number or Tax identifier
- Details of businesses you’ve owned within the past two years
- Your business account details, if you bought the business you will need to provide records of the sale.
How to register VAT:
- It’s easy to register VAT on your own and it costs nothing. Your best choice is to do it online through the HMRC website.
- If you choose not to do it yourself you can do it through an accountant or agent, you can appoint an accountant to submit your VAT Returns and deal with HMRC on your behalf.
Different VAT schemes:
- Standard VAT accounting:
You record the VAT collected on each sale and the VAT paid on each purchase, and then submit a VAT return to HMRC every quarter.
- Annual VAT accounting:
Some businesses can submit VAT return once a year.
- Flat-rate scheme:
Certain smaller businesses can skip all the VAT accounting and simply pay a percentage of their turnover as VAT.
- Cash accounting scheme:
Under cash basis accounting, you are assumed to have collected or paid VAT when money is exchanged whereas in all other schemes you are assumed to have collected or paid VAT as soon as invoice is raised.
Once you are registered:
Once you are registered you need to do the following:
- Add VAT to your prices
- Issue VAT invoices to your customers
- File VAT returns and pay any VAT due to HMRC
- Keep VAT records and VAT account
Getting your certificate:
You can get your VAT registration certificate within 30 working days this varies country to country.
Once registered you will have:
- A VAT number
- When to submit your first VAT return
- Your effective date of registration.
What is VAT return?A VAT return is a form you file with HMRC to show how much VAT you are due to pay them. This is only mandatory for those businesses that have registered themselves for VAT.
VAT return shows the amount of VAT due on sales minus the amount of VAT reclaimable on purchase. The result of this calculation is the payable amount that has to be given to HMRC.
If the reclaimable on purchase amount is greater than the amount due on sales, HMRC will give you the amount back.
How to pay VAT?VAT can be paid by various means which we will mention shortly but it is important to note a little about the different ways to pay VAT. It is imperative to remember that the deadlines for VAT payments relate to funds that have arrived in the HMRC’s account, and not all types of payment take the same time to clear and because of that you may have to pay a surcharge for late payment.
Our suggestions for the same day or 1 day payment are:
- Online or telephone banking
The remaining modes of payment can sometime take up to 3 day to clear:
- Direct Debit
- Standing order for businesses using the Annual Accounting scheme.
- Online by direct debit or credit card
- At your bank
What is VAT number?A VAT identification number is a registered identification number in the tax system that uses VAT. When you register VAT in a country you receive an identification number for their tax system.
This is a number that is 4-15 digits long, with the first two being the country code and the rest being other characters.
What are the uses of VAT number?
Your VAT number is used to track how much tax your business pays and collects through purchases and sales.
- Selling Business to Business:
When you sell to a VAT registered business they will provide you with their VAT number this will open the doors for reverse-charge mechanism for transaction.
- Filing VAT returns:
When it time to file VAT returns you use your VAT number and VAT invoice records to determine how much VAT your business owns the government or how much money they need to pay you back.
How to find VAT number?
- What is VAT number?
A VAT number is a unique number provided to a business by HMRC when the business has registered for VAT. The VAT number does not have a specific format it changes from country to country.
- Why is VAT number important?
If you try to reclaim VAT without a valid VAT number from your supplier, it can lead to HMRC rejecting your claim.
- Where to find VAT number?
When looking for VAT number for another business, your first place to look should be any invoice that has been supplied to you. If a business is registered for VAT then its unique ID should be listed on all their invoices.
What happens if a business is not VAT registered?
If you pay VAT to a supplier but they don’t have a registration number on their invoice then contact them immediately as if you do not have a valid VAT invoice you cannot reclaim any VAT they charged you.
How to check if VAT number is valid?There are a couple of ways to check if the VAT number provided is valid or not.
- Calling HMRC VAT helpline
HMRC has a complete database of VAT registered businesses, so if you wish to confirm a VAT number you call on their help line .
- Checking VIES
You can use VIES (VAT Information Exchange System) to check the validity of VAT numbers within the European Union. VIES is a website made specifically to clear doubts related to the validity of a VAT number.
How to de-register for VAT?You can cancel your VAT registration if you are no longer eligible to be VAT registered.
How do you become eligible?
- You stop trading or making VAT taxable supplies
- You join VAT group
- Your revenue drops below the threshold
How to cancel registration?You can cancel your VAT registration online or fill and send a VAT7 form and send that to HMRC.
How long does it take to confirm cancellation?
It can take up to 3 weeks for HMRC to confirm your cancellation. The official cancellation date is either the date when the reason for your cancellation took effect, or the date you asked to cancel voluntarily.
Once confirmed HMRC will send a confirmation to your VAT account. From the date of cancellation you must stop charging VAT and keep your VAT records for 6 years.
What to do after VAT has been de-registered?You will have to submit a final VAT Return for the period up to and including the VAT cancellation date. You must account for any stock and other assets you have on this date. Do not wait until you have received all you invoice before submitting your final VAT return. You are still able to claim VAT on anything you bought for your business while still registered once you get the invoice.
What is the penalty for charging VAT when not VAT registered?You cannot charge VAT is your business is not VAT registered. A penalty is payable by anyone who issues an invoice showing VAT when they are not registered for VAT, as stated in the Finance Act 2008. The penalty can be up to 100% of the VAT shown on the invoice. The minimum penalty is 10% of the VAT even if there is an unprompted disclosure to HMRC of a carless mistake, as distinct from deliberate and concealed conduct.
What to do if I charge VAT and I am not VAT registered?First, you should issue a credit note and also refund the customer for the VAT involved and explain to them that they should correct their VAT account if they have claimed an input tax deduction for the VAT you have mistakenly charged them.
Secondly, you should make an unprompted disclosure to HMRC explaining what has happened and how you are trying to correct the situation. You should also explain how the situation arose and hope that you are charged with the minimum penalty of 10%.
How to get VAT receipt from Amazon?Learning to get a VAT invoice for your previous Amazon purchases can help you if you wish to claim back VAT on your purchase.
You can obtain this information in a few different ways:
- Check you package usually both Amazon and any third party seller will include your VAT invoice inside the package.
- By checking your previous orders in your Amazon account
- Asking the seller or contacting Amazon if the purchase was made from them.
What is VAT exempt?VAT exempt can refer to goods and services which are not subject to VAT or to an organization which cannot register for VAT.
When products are sold, a sales tax known as VAT is added to the products original price; however, VAT should not be applied to certain goods or services. These products on which VAT cannot be charged are VAT exempt products.
Businesses, charities, and other types of organizations can also be considered exempt from VAT if they only sell VAT exempt product or if they are not involved with any form of taxable business activities.
VAT exempt goods and services?All though most goods and services are taxed at your countries rate of VAT, some products are taxed at reduced rates or are exempted from VAT altogether. If something is exempt from VAT, it is usually because the product is considered to be an essential good or service.
HMRC has a full list of VAT exempt products, but some of the main goods and services are:
- Sporting and physical education
- Education and training
- Certain medical treatments
- Financial services, insurance and investments
If a good or service is exempt from vat it means:
- You should not include VAT in its price and do not count towards your VAT taxable turnover
- You cannot reclaim VAT on that item and you do not keep records of VAT exempt sales.
How far back can you claim VAT and what is the process?You can reclaim your VAT in certain circumstances through your VAT return. The maximum you can claim back is up to 4 years.
If you are making taxable supplies of goods and services or doing any qualifying activites then you can reclaim VAT through your VAT 3 return. You can only reclaim VAT used for taxable supplies for your business related activities. This is if you are registered if not then you have to follow a different set of rules.