United Kingdom

Turnover threshold

70,000 GBP

Standard VAT rate

20%

Measurement period

rolling 12 month period

VAT in United Kingdom guide

UK VAT for digital service providers

In case of digital services, telecom services or broadcasting services supplied in a B2B context, the place of supply is the place where the recipient is established. No UK VAT should be charged, and reverse charge applies unless supplier and customer are established in United Kingdom. In case of digital services, telecom services or broadcasting services supplied in a B2C context we refer to the section on the Mini One-Stop Shop below for more information.

VAT is levied on most goods and services provided by registered businesses in the UK and some goods and services imported from outside the European Union. There are complex regulations for goods and services imported from within the EU. The default VAT rate is the standard rate, 20% since 4 January 2011 (more rates discussed in the below paragraph). There is also a certain UK VAT threshold company has to meet when VAT registration becomes mandatory.

In case of digital services, telecom services or broadcasting services supplied in a B2B context, the place of supply is the place where the recipient is established. No UK VAT should be charged, and reverse charge applies unless supplier and customer are established in United Kingdom. In case of digital services, telecom services or broadcasting services supplied in a B2C context we refer to the section on the Mini One-Stop Shop below for more information.

In case of digital services, telecom services or broadcasting services supplied in a B2B context, the place of supply is the place where the recipient is established. No UK VAT should be charged, and reverse charge applies unless supplier and customer are established in United Kingdom. In case of digital services, telecom services or broadcasting services supplied in a B2C context we refer to the section on the Mini One-Stop Shop below for more information.

UK VAT threshold

The VAT threshold in UK is based on VAT taxable turnover – the total value of everything what is sold or supplied that is not VAT exempt.

For the 2020/21 tax year, the UK VAT threshold is set at £85,000, but can change each year. It’s calculated on a rolling basis, so taxable turnover for a rolling 12 month period, not just in the current tax year, but also for last financial year or the calendar year must be taken into account.

UK VAT threshold table

CircumstanceVAT threshold UK applicable
VAT registration More than £85,000
Registration for distance selling into the UK More than £70,000
Registration for bringing goods into the UK from the EU More than £85,000
Deregistration threshold Less than £83,000
Completing simplified EC Sales List £106,500 or less and supplies to EU countries of £11,000 or less

VAT threshold UK for accounting scheme application:

Threshold to join schemeThreshold to leave scheme
Flat Rate Scheme£150,000 or lessMore than £230,000
Cash Accounting Scheme£1.35 million or lessMore than £1.6 million
Annual Accounting Scheme£1.35 million or lessMore than £1.6 million

Mini One-Stop Shop

The optional simplification measure called the “Mini One-Stop Shop” (MOSS) with respect to digital services, telecommunication services and broadcasting services supplied in a B2C context. The supply of these services is generally considered as taking place in the Member State of the customer, not the Member State of the supplier.The MOSS scheme allows all taxable persons supplying digital services, telecommunication services or broadcasting services to nontaxable persons in EU Member States in which they do not have an establishment, to account for the VAT due on those supplies via a web portal in the Member State in which they are identified. The MOSS allows qualifying taxable persons to avoid registering in each Member State of consumption. The MOSS simplification is available both for taxable persons established in the EU and outside the EU. The MOSS generally mirrored the scheme that was in place for non-EU established suppliers of electronically supplied digital services, telecommunication services or broadcasting services supplied to final consumers. Persons already registered under the pre-existing scheme for electronically supplied digital services, telecommunication services or broadcasting services, should retain their existing individual VAT identification numbers for the purposes of the MOSS.

VAT rates

In the United Kingdom, the term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.

In the United Kingdom, the following are the VAT rates:

  • Standard rate: 20%
  • Reduced rate: 5%
  • Zero rate: (0%)

The standard rate of VAT applies to all supplies of goods or services, unless a specific measure provides for the zero or reduced rate or an exemption.

Late – registration penalties

A penalty is assessed for late VAT registration, therefore VAT threshold in UK should be examined constantly. This penalty is calculated as a percentage of the VAT due (output tax less input tax) for the “relevant period.” The “relevant period” begins on the date on which the business is required to be registered and ends on the date on which the UK VAT authorities became fully aware of this liability.