VAT - UK

The full name of VAT is Value Added Tax. Since January 1, 1973, when the UK joined the European Economic Community, Lord Barber, the Conservative Chancellor of the Exchequer, set a 10% VAT rate for that year. However, currently, VAT in the UK has skyrocketed to 20%.

Value-added sales tax and import tax are different concepts.

When goods enter the UK, merchants are required to pay import tax on the goods, which is composed of import tariffs and value-added tax on imports.

Value-added sales tax (VAT):

The value-added sales tax (VAT) rate varies depending on the goods. Now we take the UK standard VAT rate of 20% as an example.

Value-Added Sales Tax (VAT) is the tax levied on products that have been sold. Those who have shopped abroad must have experienced tax refunds, which are value-added sales tax (VAT). The refunds do not go directly into the merchant's pocket, but are handed over to the country. It is one of the three major revenues of the UK government, with the first being Income Tax and the second being National Insurance.

 As the lifeline of the national economy, tax authorities attach great importance to value-added sales tax, and take measures, for example, frequently spot check business accounts, and severely punish enterprises that do not comply with the regulations. Companies need to report tax returns on time in compliance with the regulations if they want to develop business with a steady pace in the UK.

The standard VAT rate in the UK is 20%. The VAT rate for household fuel and baby car seats is 5%. The VAT rate for food, books, children's clothing, and other children's goods and services is 0%.

 The above VAT rates may vary, including duty-free goods.

If you want to sell goods to the UK, you must register a VAT account and declare and pay VAT. Even if you use overseas warehousing services provided by third-party logistics companies and have no office or local employees in the UK, you still need to pay VAT.

UK VAT Registration

 Foreign companies in the UK are eligible to register for VAT without a local entity, which is also known as non-UK resident VAT related trade.

UK has strict regulations on VAT registration. The situations where UK VAT registration is usually required include:

Import goods from the UK to the EU

Purchase and sell goods within the UK

Store spare goods in UK warehouses

Sell goods from the UK to other EU countries

Purchase goods from other EU countries to the UK

Sell goods from another EU member country to individual consumers in the UK through remote transactions, such as online retail

Generally speaking, VAT registration in the UK takes approximately 6 weeks. It may vary depending on the situation.

UK VAT Payment

 In the UK, trade records have corresponding legal norms, which includes:

Receipt requirements

Specifications for foreign exchange receipts and statements

Specifications for changes to previous declaration errors

UK VAT Declaration

 Companies with a UK VAT registration number must regularly submit information on all taxable goods transactions and costs. The details and methods of declaration may vary significantly. In the UK, declarations can be submitted on a monthly or quarterly basis. After each declaration cycle, each company has one month and seven days to complete the declaration work.

The declaration can and must be submitted through the online electronic service system of the Her Majesty's Revenue and Customs.

 Reporting transaction data: Intrastat and EC sales list

After the declaration, companies may be required to provide additional data and information. According to the requirements of Intrastat (also known as the "Supplementary Data Declaration Specification"), companies are required to provide a list of commodity transactions with other EU countries on a monthly basis based on their annual sales situation.

UK VAT Refund

If a foreign company does not directly sell goods subject to taxation in the UK, but indirectly purchases products or services subject to taxation, this portion of VAT can be refunded.