WHAT IS VAT?

Understanding What is VAT? : A Simple Guide for UK Business Owners

Running a business in the UK? Then VAT (Value Added Tax) is something you can’t ignore! Whether you’re selling products, services,
or handling transactions with Burrak Payments’ card machines, understanding VAT is crucial to staying compliant and keeping your finances
in check. Let’s break it down in a way that’s easy to understand.

What is VAT?

VAT (Value Added Tax) is a government tax applied to most goods and services in the UK. It’s a tax on the value added at each stage of
production and sale, meaning businesses collect VAT from customers and pass it on to HMRC (His Majesty’s Revenue and Customs).

Who Needs to Pay VAT?

If your business earns more than £90,000 per year (2024 VAT threshold), you must register for VAT. But even if you earn less, you can voluntarily
register to claim back VAT on business purchases and look more established to clients.

VAT Rates in the UK

There are different VAT rates depending on the type of goods or services you sell:

Standard Rate (20%) – Applies to most goods and services.

Reduced Rate (5%) – Covers specific items like home energy and children’s car seats.

Zero Rate (0%) – Includes essentials like most food, books, and children’s clothing.

Exempt Items – Some financial services, education, and medical treatments have no VAT at all.

How Does VAT Affect My Business?

If your business is VAT-registered, you must:
✅ Charge VAT on your sales (output VAT).
✅ Pay VAT on purchases (input VAT).
✅ Submit VAT returns to HMRC, usually every 3 months.
✅ Reclaim VAT on business expenses, reducing your overall tax bill.

VAT and Card Machine Payments

If you’re using a Burrak Payments card machine, VAT applies to most card transactions. Here’s how it works:

If you’re VAT-registered, VAT is included in the final price you charge customers.

Your receipts should show the VAT amount separately (if applicable).

You’ll keep a record of all VAT collected and report it in your tax return.

Using a reliable card machine ensures accurate VAT tracking, reducing tax errors!

Should I Register for VAT?

✔ If you earn over £90,000, it’s mandatory.
✔ If you want to claim back VAT on business expenses, voluntary registration could save you money.
✔ If you sell zero-rated goods, you might still benefit from registration by reclaiming VAT on purchases.

Stay VAT-Compliant with Burrak Payments!

At Burrak Payments, we help businesses grow with fast, secure, and VAT-compliant card machines. Whether you’re new to VAT or a seasoned pro, our
payment solutions ensure smooth transactions and accurate record-keeping—helping you focus on running your business.

Need a powerful, reliable, and VAT-friendly card machine? Get in touch with Burrak Payments today!

Study Base Topics on VAT

Here are some fresh topic ideas on What is VAT? that you can explore:

VAT Explained: A Simple Guide for Businesses and Consumers
How VAT Works: Understanding Rates, Exemptions, and Compliance
VAT vs. Sales Tax: What’s the Difference and Why It Matters?
How to Register for VAT: A Step-by-Step Guide for Businesses
Claiming VAT Refunds: Who Qualifies and How to Apply?
VAT in the Digital Age: How E-commerce Businesses Handle VAT
Common VAT Mistakes Businesses Make (And How to Avoid Them!)
The Impact of VAT on Small Businesses: Challenges and Solutions
VAT for Freelancers and Sole Traders: What You Need to Know
How VAT Affects Pricing Strategies for Businesses
International VAT: How Different Countries Handle Value Added Tax
Upcoming Changes in VAT Regulations for 2025: What to Expect
How VAT Impacts Online Subscriptions and Digital Services
Understanding Reverse Charge VAT: A Guide for B2B Transactions
VAT and Import Duties: What Businesses Need to Know About Cross-Border Trade