United Kingdom VAT guidelines

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FACTSHEET
Country code	UK
Tax name	VAT
Tax Authority	HM Revenue & Customs

Overview

United Kingdom follows Value Added Tax (VAT) scheme as the consumption tax. VAT is applied to the value added at each stage of the production and distribution chain. It's ultimately paid by the end consumer.

Recent changes

Dated, officially-sourced changes to UK VAT, newest first. The full history is in our worldwide tax-updates feed.

• 2026-07-17 — HMRC published Revenue and Customs Brief 6 (2026): supplies of GMC-registered locum doctors made through employment businesses, previously treated as taxable, are now treated as exempt under Item 5, Group 7, Schedule 9 to the VAT Act 1994, following the First-tier Tribunal decision in Isle of Wight NHS Foundation Trust v HMRC [2025] UKFTT 1114 (TC); the Brief also sets out a process for claiming refunds of overdeclared output tax. (HMRC) — see issue
• 2026-07-29 — Capital Goods Scheme amended: computers/computer equipment removed from the Part 15 capital items list entirely, and the land/buildings/civil-engineering expenditure threshold rises from £250,000 to £600,000 (exclusive of VAT); expenditure before this date stays under the old £250,000 threshold (updated from earlier corroboration-only reporting — now confirmed against HMRC's Revenue and Customs Brief 7 and the updated VAT Notice 706/2). (HMRC) — see issue
• 2026-07-21 — Prime Minister announced VAT on domestic household electricity (not gas) will fall from 5% to 0% from 1 October 2026, funded by cancelling the Digital ID programme; also extends to eligible small businesses, charities and residential care homes. Announced only — no implementing statutory instrument had been made as at 3 August 2026; the current 5% reduced rate remains in force until an order is made. (Prime Minister's Office / HM Treasury) — see issue

• 25 June 2026 — Temporary 5% VAT (reduced from the 20% standard rate) on children's meals at catering establishments, children's admission tickets, and admissions to qualifying family attractions (amusement parks, zoos, museums, soft play). Applies 25 June – 1 September 2026; sport is excluded. Announced 21 May 2026 in Revenue & Customs Brief 5 (2026). ^[HMRC] — see Last Week in Taxes #5.

Tax Rates

• Standard Rate: 20%

  • Applicable to the majority of taxable supplies, with specific exemptions.

• Reduced Rate: 5%

  • Applies to certain goods and services, such as children's car seats and household energy (domestic gas and electricity).

• Zero Rate: 0%

  • Covering items like books, newspapers, periodicals (including digital versions), and specific types of food products.

• Flat Rate Scheme

  • Under this scheme, you remit a predetermined VAT rate to HMRC. You retain the surplus between your customer charges and the VAT payment to HMRC. With the exception of specific capital assets valued at over £2,000, you are not permitted to recover VAT on your purchases. To be eligible for participation in this scheme, your VAT turnover must not exceed £150,000 (exclusive of VAT), and you are required to make an application to HMRC.

Forward-looking — not yet in force: domestic electricity VAT

On 21 July 2026 the Prime Minister announced that VAT on domestic electricity only (not gas) will fall from 5% to 0% from 1 October 2026, also covering eligible small businesses that qualify for the domestic energy VAT relief, charities and residential care homes on the reduced rate. As at 3 August 2026 no statutory instrument implementing this had been made — legislation.gov.uk's only 2026 VAT-titled instruments are SI 2026/765, 2026/576 and 2026/307, none touching electricity or Schedule 7A VATA 1994. The 5% reduced rate above remains the current, in-force rate for domestic electricity until an order is made. ^{[PM's Office/HM Treasury]}

Registration Threshold

£90,000 - Businesses based in the UK are required to register for VAT if the total VAT taxable turnover for the last 12 months was over £90,000. The registration threshold rose from £85,000 to £90,000 on 1 April 2024, and the deregistration threshold rose to £88,000 on the same date. ^[HMRC]

Who should register ?

Registration to HMRC is required under following circumstances

• The cumulative VAT taxable turnover within the preceding 12-month period exceeded £90,000 (the VAT threshold).
• Forecasts indicate that your turnover will surpass £90,000 in the upcoming 30 days.
• Non-established taxable persons (NETPs) are subject to these conditions regardless of the VAT threshold.
• While being situated in Northern Ireland and dealing in VAT-exempt goods or services, you procure goods valued at over £90,000 from EU VAT-registered suppliers for business purposes.

How to enroll for VAT in the UK?

VAT registration can be done in two ways

• Online registration by utilizing the Government Gateway user ID and password.
• Opt for registration through an agent.

Time of supply a.k.a tax point

This is the specific date that is considered for tax purposes when a transaction occurs.

There are different scenarios where the corresponding Tax Points can vary. Following are some examples

• When no invoice is required → The date of supply
• When a VAT invoice is issued → The date of the invoice
• When a VAT invoice is issued 15 days or more after the date of supply → The date when the supply actually occurred
• When payment or an invoice is issued in advance of the supply → The earlier of the date of payment or the date of the invoice

The date of supply is defined as follows:

• For goods: It is the date when they are dispatched, collected, or made available, such as when they are installed in the customer's residence.
• For services: It is the date when the service work is completed.

Non residents (NETPs)

Who is a NEPT ?

A Non-Established Taxable Person (NETP) refers to an individual or entity that lacks regular residence in the UK, does not maintain a physical presence or establishment in the UK, and, in the case of a company, is not legally incorporated in the UK.

If you qualify as an NETP and engage in any taxable transactions in the UK, irrespective of their monetary value, including the provision of digital services, you are obligated to register for VAT.

Regsitration for NETPs

Registration is required if you’re an NETP and you make any taxable supplies in the UK, regardless of their value and including supplies of digital services

VAT number format

The tax identification number in UK is called VAT number. The format is as follows. VAT number has either 9 or 12 numbers, sometimes with ‘GB’ at the start, like 123456789 or GB123456789. You can check the validity of UK VAT number from the official HMRC site or a Vat validation provider like Lookuptax.

Invoice requirements

A VAT-registered person must give a VAT invoice to any other VAT-registered person whenever they supply standard-rated or reduced-rated goods or services. The power to prescribe what that document contains sits in VAT Act 1994, Schedule 11 paragraph 2A; the rules themselves are regulations 13 to 20 of the Value Added Tax Regulations 1995 (SI 1995/2518). ^[1] The invoice matters to the buyer more than the seller: it is the primary evidence that lets them recover the VAT charged as input tax. ^[2]

Sourcing

legislation.gov.uk was unreachable from this environment throughout this update (HTTP 202 with an empty body, behind an access challenge), so the regulation text below is cited to HMRC's own restatements rather than to the SI directly — the VAT Traders' Records Manual, which quotes regulations 14(2) and 16 verbatim, together with VAT Notice 700, VAT Notice 700/21 and VAT Notice 725. Every figure below is HMRC-published.

Mandatory content

Regulation 14(1) sets the particulars a full VAT invoice must show: ^{[3] [4]}

Required particular	Notes
A sequential number based on one or more series which uniquely identifies the document	See Numbering below. [3]
The time of supply (tax point)	See Time of supply above. [4]
The date of issue of the document, where different from the time of supply	[4]
Supplier's name, address and VAT registration number	You may invoice under a trading name, but the name and address under which you are registered must appear somewhere on the document. [4]
Name and address of the customer	The customer's own VAT number is not a required particular on a domestic UK invoice — unlike most EU states. [3]
A description sufficient to identify the goods or services supplied	Coded descriptions (for example catalogued part numbers) are accepted in defined circumstances, provided customers hold an up-to-date catalogue that can be produced to an inspecting officer. [5]
For each description: the quantity of goods or extent of services, the rate of VAT, and the amount payable excluding VAT	May be expressed in any currency. [4]
The gross total amount payable, excluding VAT	May be expressed in any currency. [4]
The rate of any cash discount offered	[4]
The total amount of VAT chargeable	Must be expressed in sterling, whatever currency the rest of the invoice uses. [4]
The unit price	Applies to countable goods or services; may be omitted where a unit price is not normally given in that business sector and the customer has not asked for it. [4]
A margin scheme reference or indication, where a margin scheme applies	[3]
A reverse charge reference or indication, where the customer is liable for the tax	Accepted wordings are in Invoice Notes for Reverse Charges below. [3]

Source snapshot captured 2026-08-03 — original

Where an invoice mixes rates, any zero-rated or exempt items must be shown clearly as carrying no VAT, with a separate total for their values. ^[4]

What a compliant invoice looks like

HMRC publishes a worked example of a completed VAT invoice at Notice 700 paragraph 16.7, and a second at Notice 700/21 paragraph 4.3. The 16.7 example shows the supplier's name, address and VAT number, the customer's name and address, the sales invoice number, the time of supply, a line-item table carrying the quantity, description, amount excluding VAT, VAT rate and VAT for each line, and then the total before VAT, the VAT, and the total. ^{[4] [9]}

HMRC renders it as a worked example in the body of the notice rather than as a pictured document, and it is not annotated — treat it as a filled-in illustration of the reg 14(1) particulars above.

Source snapshot captured 2026-08-03 — original

Issuance deadline

Regulation 13(5) requires the invoice to be provided within 30 days of the time the supply is treated as taking place under section 6 VATA 1994, or within such longer period as HMRC allow. An invoice issued under the 30-day rule does not itself create a tax point (unlike one issued before the basic tax point, or within 14 days of it). ^{[6] [4]}

The 30 days can be extended without applying to HMRC where you are awaiting invoices from your own suppliers or sub-contractors, where a 14-day extension has already been approved, where special accounting arrangements have been approved, or where you are newly registered and have not yet been told your VAT number — in that last case the invoice is due within 30 days of the date you are advised of the number. In any other case you must apply in writing to HMRC's VAT Written Enquiries Team. ^[4]

Numbering

Regulation 14(1)(a) requires "a sequential number based on one or more series which uniquely identifies the document". HMRC confirm the series may be alphanumeric rather than purely numeric, and that it need not begin at 1 — provided the series runs consecutively and each document is uniquely identified. More than one series is permitted. ^[3]

Credit and debit notes

Credit notes are governed by regulations 15, 15C, 24A and 38 of the VAT Regulations 1995; regulation 15C sets the validity conditions and regulation 38 the VAT-account adjustment. ^{[7] [8]}

Instrument	When it is used	Deadline	What it must show
Credit note	A genuine mistake or overcharge, or an agreed reduction in the value of a supply. It must be issued to the customer, give the customer real value, be issued in good faith, and must not be used for a bad debt.	Within 14 days of the decrease in consideration / of the refund payment being made.	Identifying number and date of issue; supplier's name, address and VAT number; customer's name and address; a description identifying the goods or services credited; quantity and amount for each description; total amount credited excluding VAT; the rate and amount of VAT credited (in sterling); and the number and date of the original VAT invoice(s).
Debit note	A genuine mistake or undercharge, or an agreed increase in the value of a supply.	Within 14 days of the increase being agreed between supplier and customer.	Identifying number and date of issue; supplier's name, address and VAT number; customer's name and address; the identifying number and date of the original invoice(s); a description identifying the goods or services the increase applies to; the amount of the increase excluding VAT; and the rate and amount of VAT debited (in sterling).

^{[4] [8]}

Two rules catch people out: the VAT rate on a credit or debit note is the rate in force at the tax point of the original supply, not the rate current when the note is issued; and a credit note issued without any VAT adjustment should state "This is not a credit note for VAT". Zero-rated or exempt amounts included in a note must be totalled separately and shown as carrying no VAT credit. ^[4]

Currency and language

Line amounts and the gross total excluding VAT may be expressed in any currency; only the total amount of VAT chargeable must be in sterling. ^[9]

The conversion basis is set out in VAT Notice 700 paragraph 7.6, which has force of law under VAT Act 1994, Schedule 6 paragraph 11. There are three permitted methods, and the rate to use is the one current at the time of the supply: ^[4]

1. the UK market selling rate at the time of the supply — the default; rates published in national newspapers are acceptable evidence;
2. the period rate of exchange published by HMRC for customs purposes — optional, adoptable for all supplies or for a defined class, and once adopted it cannot be changed without HMRC's written agreement;
3. a commercial rate or method of your own, but only on written application to HMRC's VAT Written Enquiries Team; forward rates are not acceptable.

There is no European Central Bank rate option in UK law — the ECB rate is an EU invoicing rule and does not appear in HMRC's list. See Foreign currency invoice below for what must additionally be shown in sterling.

Language: regulation 13B permits VAT invoices to be written in any language. HMRC may serve a written notice requiring an English translation of specified invoices, which must be provided within 30 days of the notice. ^[10]

Simplified, retailers' and modified invoices

The UK threshold is £250 including VAT per supply. ^[4]

Consideration for the supply	Document permitted
£250 or less (including VAT)	Simplified invoice (non-retailers) or retailer's less detailed invoice — reduced field set below
More than £250	Full VAT invoice, or a modified invoice showing VAT-inclusive rather than VAT-exclusive values, if the customer agrees

Regulation 16 relieves a retailer from issuing a VAT invoice at all except at a taxable customer's request; where the consideration does not exceed £250 the invoice need contain only the retailer's name, address and registration number, the time of supply, a description sufficient to identify the goods or services, the total amount payable including VAT, and — for each rate chargeable — the gross amount payable including VAT and the VAT rate applicable. Such an invoice must not contain any reference to an exempt supply. ^[11] HMRC apply the same reduced field set and the same £250 ceiling to simplified invoices issued by non-retailers, adding that the customer must agree and that a Northern Ireland-based supplier's customer must not be from an EU member state. ^{[4] [2]}

A modified invoice shows tax-inclusive values per description, provided the foot of the invoice separately shows the total tax-inclusive value of the positive-rated items, the total VAT included in that value, the total tax-exclusive value of the positive-rated items, and a separate total of any zero-rated supplies. In all other respects it must show what a full invoice shows. HMRC's manual limits this facility to retail businesses or the retail establishment of a composite business, for retail sales from stock currently on sale to the public. ^[12]

A field-by-field comparison of the three invoice types is in Invoice format immediately below.

Northern Ireland — invoices for goods supplied to EU member states

Great Britain and Northern Ireland share the same invoice particulars for domestic supplies. The one place the Windsor Framework changes an invoicing particular is a supply of goods from Northern Ireland to a person in an EU member state: under regulation 14(2) a person identified for VAT in Northern Ireland must show a reduced set of the regulation 14(1) particulars plus the letters XI as a prefix to their own registration number, the customer's VAT registration number carrying its member-State country code, the gross amount payable excluding VAT, per-description quantities with the VAT rate and amount payable excluding VAT expressed in sterling, a description identifying any new means of transport, and — for an exempt or zero-rated supply — a reference or indication of that treatment. ^[13] VAT Notice 725 restates the XI prefix requirement and applies the same 30-day issuing deadline to these supplies. ^[14] Great Britain supplies continue to use the GB prefix; see VAT number format above.

Retention

VAT Act 1994, Schedule 11 paragraph 6(3) requires every taxable person to preserve the records they are required to keep for a period not exceeding 6 years, and they may be preserved by any locally approved means. The obligation survives deregistration — a deregistered trader generally keeps records until the 6-year limit is reached, subject to special rules for insolvency and transfers of a going concern. HMRC may allow a shorter period, but only on written application. ^[15] VAT Notice 700/21 states the same period as the working rule: keep all business records for VAT purposes for at least 6 years, including copies of every VAT invoice issued and every purchase invoice received. ^[2]

Form. Under Making Tax Digital, VAT records and the VAT account must be kept digitally in functional compatible software — but some documents must still be preserved in their original form (HMRC's example is the C79 import VAT certificate). A scanned image is acceptable in place of the original invoice where the image is retained and contains all the detail required for VAT purposes. ^[2] The Record Keeping section below covers the digital-links rules and the longer 10-year period that applies under the OSS/MOSS schemes.

Technical format

No structured schema is mandated. An invoice may be issued electronically in any form — a structured XML message over EDI, or a PDF by email — provided it carries all the information a paper VAT invoice must carry. Electronic invoices are valid input-tax evidence subject to the normal rules and provided authenticity of origin, integrity of the data and legibility of the content can be ensured; the detailed conditions are in VAT Notice 700/63. Outsourcing invoice issuance to a third party does not transfer any of the legal obligations for contents, storage or production of invoices — they remain with the supplier. ^[4]

Invoice format

	Full Invoice	Simplified Invoice	Modified Invoice
Unique invoice number that follows on from the last invoice	Yes	Yes	Yes
Your business name and address	Yes	Yes	Yes
Your VAT number	Yes	Yes	Yes
Date	Yes	No	Yes
The tax point (or 'time of supply') if this is different from the invoice date	Yes	Yes	Yes
Customer's name or trading name, and address	Yes	No	Yes
Description of the goods or services	Yes	Yes	Yes
Total amount excluding VAT	Yes	No	Yes
Total amount of VAT	Yes	No	Yes
Price per item, excluding VAT	Yes	No	Yes
Quantity of each type of item	Yes	No	Yes
Rate of any discount per item	Yes	No	Yes
Rate of VAT charged per item - if an item is exempt or zero-rated, make clear no VAT on these items	Yes	Yes (1)	Yes
Total amount including VAT	No	Yes (1)	Yes

note

(1) - In the case of a Simplified or Modified invoice, the total amount including VAT is required.

Credit Note Format

The credit or debit note you generate must include the following

• same information as the VAT invoice
• reason why it was issued
• total amount credited, excluding VAT
• number and date of the original VAT invoice

Domestic Reverse Charge

The reverse charge mechanism is applicable exclusively to supplies that meet the following criteria:

• The supplies must be specified supplies of goods or services.
• The recipient (your customer) is either registered for UK VAT or is obligated to register.
• Your customer acquires the goods or services for business purposes.
• In the case of specified goods, such as mobile phones or computer chips, the VAT-exclusive value exceeds the de minimis limit.

Specified goods encompass mobile phones, computer chips, wholesale gas, and wholesale electricity. Specified services comprise emission allowances, wholesale telecommunications, renewable energy certificates, and construction services.

Supplies subject to the reverse charge are not eligible for the Flat Rate Scheme.

Businesses that employ the cash accounting scheme must exclude sales and purchases subject to the reverse charge from the scheme. These supplies should be reported under the reverse charge regulations when submitting returns.

For a detailed understanding of the Domestic Reverse Charge procedure, you can refer to VAT Notice 735.

Invoice Notes for Reverse Charges

When your customer is responsible for remitting the VAT, the invoice must bear the specific reference 'reverse charge.' Several examples comply with this legal requirement, including:

• "reverse charge: VAT Act 1994 Section 55A applies"
• "reverse charge: S55A VATA 94 applies"
• "reverse charge: Customer to pay the VAT to HMRC"

The invoice should clearly indicate the amount of VAT subject to the reverse charge, but this amount should not be included in the total VAT charged.

If your billing system cannot display the reverse charge amount, the wording should convey that VAT is to be accounted for by your customer at the standard VAT rate, based on the VAT-exclusive selling price for the reverse charge goods or services.

Sample invoice with reverse charge

For reference, you can view a sample invoice that illustrates the application of the reverse charge mechanism at the following link: Sample Invoice.

Credit Notes for Reverse Charges

Suggested phrasing for credit notes related to reverse charges includes:

• "reverse charge: customer to account for the output tax adjustment of – £[enter the amount] to HMRC"
• "reverse charge: UK customer to account for the output tax adjustment of – £[enter the amount] to HMRC"
• "customer to account to HMRC for the adjustment to reverse charge output tax on the VAT-exclusive price of items marked reverse charge"

Cross-Border Reverse Charges

The reverse charge mechanism is employed in cases where:

1. The place of supply is the United Kingdom.
2. The supplier is situated outside the United Kingdom.
3. You, as the recipient, are located within the United Kingdom.
4. The supply is not exempt, which includes supplies that are subject to an option to tax.
5. For supplies falling outside the general rule, you are registered for VAT in the United Kingdom.

The reverse charge applies to nearly all business-to-business (B2B) service supplies, except for those that are exempt, unless specific 'use and enjoyment' provisions are in effect.

This mechanism comes into play when you, as the customer, receive services. In such cases, you are required to assume the roles of both the supplier and the recipient of the services. It is applicable even if your supplier, despite having a UK VAT registration number, is based outside the United Kingdom.

For instance, if you receive telecommunication services from a supplier in the USA and utilize those services within the USA, although they would typically be taxable in the UK under the B2B general rule, specific use and enjoyment rules are applicable.

Digital Products

If your business provides digital services to consumers in the UK, these services are subject to UK VAT. However, if you offer digital services to consumers outside the UK, they are exempt from UK VAT.

When you distribute digital services to consumers through a third-party platform or marketplace, it is the responsibility of the digital platform to account for VAT on the supply, relieving your business of this obligation.

Selling Digital Products to the EU

If you're a UK-based business offering digital services to consumers in the EU, the place of supply is determined by the consumer's location.

You have two options:

1. Register for the Non-Union VAT MOSS scheme in an EU member state.
2. Register for VAT in every EU member state where you provide digital services to consumers.

Validating if the customer is a business

Apart from validating VAT number using services like Lookuptax, merchants can also accept alternative evidence such as website detail that the customer is in business incase they cant provide the vat number. Its the merchant's discretion and customer cannot ask you to treat a supply as business-to-business if they have not given a valid VAT registration number

Location determination

Merchants are expected to gather evidence of the location of the customer while seliing digital goods and services. Here are the requisite pieces of evidence that the seller must gather for digital services:

• The residential billing address of the consumer.
• The Internet Protocol (IP) address of the device utilized by the consumer.
• The consumer's banking information.
• The country code of the SIM card used by the consumer.
• The location of the consumer's fixed landline through which the service is provided.
• Any other commercially pertinent information, such as product coding data that electronically links the transaction to a specific jurisdiction.

For businesses engaged in cross-border digital service provision, it is necessary to obtain and maintain two pieces of information as proof of the consumer's habitual residence.

• During the point of sale, request the consumer to provide either of the following:
  • billing address, including the country
  • telephone number, including the country dialling code
• When the consumer makes a payment for the digital service, it is essential to obtain a notification from the payment service provider, which contains the two-digit country code of the consumer's residential country, as recorded in their information.

If these two pieces of information match, it will suffice to establish the consumer's location, and you can document these details in your accounting records.

Digital portals, platforms, gateways and marketplaces

If the platform operator recognizes you as the seller, establishes the general terms and conditions, authorizes payments, or manages the delivery or download of the digital service, then it becomes the platform operator's responsibility to account for the VAT payment imposed on the consumer.

Foreign currency invoice

This is applicable only if you are selling to your customers in UK in a foreign currency other than sterling. For VAT-related purposes, it is imperative to convert all purchases or sales into British Pounds (sterling). This conversion should be performed when you document the transaction in your VAT records to represent the transaction in sterling.

If the transaction is subject to UK VAT, your invoices must additionally display the following details in sterling:

• The total net value of goods and services at each VAT rate.
• The applicable VAT amount, if any, at each rate.

There is no requirement to display sterling figures for each line item on the invoice.

Exchange rates

You can use the following methods to get the FX rates for printing on your foreign currency invoices

• UK market selling rate at the time of the supply. The rates published in national newspapers are acceptable.
• Exchange rates published by HM Revenue and Customs (HMRC). This is known as the ‘period rate of exchange’

VAT returns

A VAT Return is a document that you complete to inform HM Revenue and Customs (HMRC) about the amount of VAT you've invoiced to your customers and the amount you've paid to other businesses.

VAT Returns filling frequency

Typically, you are required to send a VAT Return to HMRC every quarter, which is referred to as your 'accounting period.'

If you are VAT-registered, it's mandatory to submit a VAT Return even if you don't owe any VAT or have any VAT to reclaim.

Another method for reporting VAT is referred to as "payments on accounts," which involves making an advance payment of VAT. The deadline for this is usually one calendar month and seven days after the conclusion of your accounting period, and this deadline also coincides with the date for settling your VAT liability to HMRC. It's important to factor in the time needed for your payment to be received by HMRC.

VAT Return format

You should ensure that your VAT Return contains the following details:

1. The total sum of your sales and purchases.
2. The amount of VAT that you are liable to pay.
3. The amount of VAT that you are eligible to reclaim.
4. The amount of VAT owed to you by HM Revenue and Customs (HMRC), provided you are seeking reimbursement for VAT associated with business expenses.

It's essential to account for the VAT based on the entire value of your sales, even in situations where:

• You receive goods or services as payment, such as in a part-exchange scenario.
• You have not levied any VAT on the customer; in such cases, the total price you charge is considered to include VAT.

If you are VAT-registered in Northern Ireland, it is necessary to incorporate EU sales in your VAT Return and also complete an EC Sales List.

Sending an inaccurate return can result in a penalty of up to 100% of any erroneously stated or over-claimed tax.

To manage import VAT on your VAT Return, you can utilize 'postponed VAT accounting.' This system enables you to report import VAT and subsequently reclaim it as a business expense within the same VAT Return.

VAT payments

Both online and offline payment methods are available for payments The VAT you pay is usually the difference between any VAT you’ve paid to other businesses, and the VAT you’ve charged your customers.

Record Keeping

Retention of VAT Records:

You are required to retain VAT records for a minimum of 6 years. This duration extends to 10 years if you are utilizing the VAT One Stop Shop (OSS) scheme or have previously used the VAT Mini One Stop Shop (MOSS) scheme.

Digital Record-Keeping:

Your digital records should encompass the following:

• VAT associated with the goods and services you provide (supplies made).
• VAT linked to the goods and services you receive (supplies received).
• Details regarding the 'time of supply' and the 'value of supply' (value excluding VAT) for all your purchases and sales.
• Any adjustments you make to a return.
• Records related to reverse charge transactions, where you document VAT for both the sale price and the purchase price of goods and services you acquire.
• Information pertaining to any VAT accounting schemes you participate in.
• If you operate under a retail scheme, your overall daily gross takings.
• If you use the Flat Rate Scheme, the items for which you can claim VAT.
• For those involved in gold trading and utilizing the Gold Accounting Scheme, your total sales and the associated VAT.

Digital Linking of Records:

If you use multiple software packages or products for record-keeping and return submission, you must establish digital links between them. Manual data transfer or 'copy and paste' methods are not permitted. Digital linking can be achieved through various means, such as:

• Employing formulas to link cells in spreadsheets.
• Transmitting records via email.
• Storing records on a portable device to provide to your agent.
• Importing and exporting XML and CSV files.
• Downloading and uploading files as required.

Capital Goods Scheme (CGS)

The Capital Goods Scheme requires businesses to adjust their initial VAT recovery on certain high-value capital items over several years if the proportion of taxable use changes.

Effective 29 July 2026, The Value Added Tax (Amendment) Regulations 2026 (SI 2026/765) amend Part 15 of the VAT Regulations 1995 (the CGS) as follows:

• Computers and computer equipment are removed from the Part 15 capital items list entirely — they no longer require multi-year VAT-recovery adjustment tracking.
• The expenditure threshold for land, buildings and civil engineering works rises from £250,000 to £600,000 (exclusive of VAT).

The change does not apply to relevant expenditure incurred before 29 July 2026, which continues to be governed by the previous £250,000 threshold — so businesses run two populations of CGS items (old-rules and new-rules) for several years. ^{[1] [2]}

Sourcing

legislation.gov.uk's own page for SI 2026/765 was intermittently unreadable behind an access challenge at various times; the figures above are confirmed against HMRC's Revenue and Customs Brief 7 (2026) and the updated VAT Notice 706/2, both of which state the £600,000 threshold, the removal of computers from scope, and the 29 July 2026 effective date directly.

VAT exemption for GMC-registered locum doctors

Revenue and Customs Brief 6 (2026), published 17 July 2026, updates HMRC's position on the VAT treatment of supplies of General Medical Council (GMC) registered locum doctors, including supplies made through an employment business. HMRC's current position is that these supplies may fall within the exemption at Item 5, Group 7, Schedule 9 to the VAT Act 1994 — "the provision of a deputy for a person registered in the register of medical practitioners" — following the First-tier Tribunal decision in Isle of Wight NHS Foundation Trust v HMRC [2025] UKFTT 1114 (TC). ^[1]

The position is narrow: it applies only where the individual supplied is a GMC-registered medical practitioner performing a role that must be carried out by such a practitioner. It does not extend to other GMC-registered health professionals (for example allied health professionals, anaesthesia associates or physician associates) or to general staffing services outside Item 5. As HMRC put it: "These supplies would previously have been treated as taxable supplies, but are now treated as exempt." ^[1]

Claiming a refund of overdeclared output tax. A business that charged output tax at the standard rate on these supplies, and now considers they should have been exempt, may claim a refund of the overdeclared output tax if the supplies were made within the last 4 years. Only the person who made the supply of staff and charged the output tax can claim. Depending on the amount, a business can either adjust the VAT return for the period in which it discovers the error, or submit an error correction notification using form VAT652, emailed to HMRC's dedicated locum-doctors-claim mailbox with "Locum doctors claim RCB 6/26" in the subject line. HMRC will not pay a claim that would result in unjust enrichment, and will review claims case by case, including their effect across the supply chain and under partial exemption. Reclassifying these supplies as exempt also affects input tax already recovered on them — businesses need to work through the partial exemption consequences before finalising a claim. ^[1]

Reference links

• How to register for VAT
• Appointing a tax agent on your behalf
• Location evidence
• Transactions in foreign currencies and VAT
• A guide to record keeping in UK
• Revenue and Customs Brief 6 (2026) — VAT liability of the supply of temporary medical staff (locum doctors)

Frequently Asked Questions

The UK VAT registration threshold was £90,000 — has it changed?

Yes. The UK VAT registration threshold increased from £90,000 to £90,000 on 1 April 2024. The deregistration threshold also increased to £88,000 on the same date. You must register if taxable turnover in the past 12 months exceeded £90,000, or you expect it to exceed £90,000 in the next 30 days. You can deregister if turnover is expected to fall below £88,000 in the next 12 months. ^[1]

UK VAT Flat Rate Scheme — how does the 1% Limited Cost Trader rule work?

The Limited Cost Trader (LCT) rule applies if your relevant goods cost less than 2% of your FRS turnover or less than £1,000 per year. LCTs pay a flat rate of 16.5% — which eliminates most FRS benefit for service-based businesses with low physical goods spend. For most pure service businesses, standard VAT accounting may produce a better outcome. Calculate your LCT status before joining FRS. ^[1]

Making Tax Digital — what software is acceptable and what counts as a "digital link"?

MTD for VAT (mandatory for all VAT-registered businesses since April 2022) requires: (1) keeping digital VAT records; (2) submitting via MTD-compatible software (Xero, QuickBooks, Sage, FreeAgent, etc.). A digital link means data is electronically transferred without manual re-keying — copy-and-paste is not acceptable. Accepted digital links: API connections, file import/export (CSV), email with file attachment. Spreadsheet users need bridging software to make submissions MTD-compliant. ^[1]

UK Domestic Reverse Charge for construction — does it apply to my subcontracting services?

The Domestic Reverse Charge (DRC) for construction (effective 1 March 2021) applies when: (1) services are CIS supplies; (2) both supplier and customer are VAT-registered; (3) the customer is not an end user. When DRC applies, subcontractors show the net amount and VAT rate on the invoice but do not collect VAT — the main contractor accounts for it. Key error: applying DRC to supplies to end users (building owners) when standard VAT applies. ^[1]

How does postponed VAT accounting (PVA) work for UK imports post-Brexit?

Postponed VAT accounting allows UK VAT-registered importers to account for import VAT on the VAT return rather than paying at the border. On the VAT return, import VAT appears as both output tax (Box 1) and input tax (Box 4) — net cash effect is zero for fully business-use imports. Access your Monthly Postponed Import VAT Statement (MPIVS) through your HMRC online account — this replaces the C79 certificate for PVA imports. ^[1]

Has the UK Capital Goods Scheme threshold changed for buildings and computers in 2026?

Yes, with effect from 29 July 2026. The Value Added Tax (Amendment) Regulations 2026 (SI 2026/765) (1) remove computers and computer equipment from the Part 15 capital items list entirely, so they no longer need multi-year VAT-recovery adjustment tracking; and (2) raise the expenditure threshold for land, buildings and civil engineering works from £250,000 to £600,000 (exclusive of VAT). Capital expenditure incurred before 29 July 2026 stays under the old £250,000 threshold. Confirmed against HMRC's Revenue and Customs Brief 7 (2026) and the updated VAT Notice 706/2. ^[1]

Are supplies of GMC-registered locum doctors exempt from UK VAT?

Yes, following a change in HMRC's position published 17 July 2026. Revenue and Customs Brief 6 (2026) states that supplies of GMC-registered locum doctors — including where supplied via an employment business — may fall within the exemption at Item 5, Group 7, Schedule 9 to the VAT Act 1994 (the provision of a deputy for a registered medical practitioner), following the First-tier Tribunal decision in Isle of Wight NHS Foundation Trust v HMRC [2025] UKFTT 1114 (TC). In HMRC's own words: "These supplies would previously have been treated as taxable supplies, but are now treated as exempt." The exemption is limited to GMC-registered doctors performing a role only a registered practitioner can perform — it does not cover other health professionals or general staffing. Businesses that overdeclared output tax on these supplies in the last 4 years can claim a refund (by return adjustment or error correction notification, form VAT652), subject to the unjust enrichment rules, and must also work through the effect on input tax already recovered. ^[1]

Is VAT on domestic electricity really being cut to 0% in the UK?

It has been announced but is not yet law. On 21 July 2026 the Prime Minister announced VAT on domestic household electricity (not gas) will fall from 5% to 0% from 1 October 2026, funded by cancelling the Digital ID programme. The cut extends to small businesses eligible for the domestic energy VAT relief, charities and residential care homes on the reduced rate. As at 3 August 2026 no statutory instrument implementing this had been made — until one is, the current 5% reduced rate on domestic fuel and power remains in force. ^[1]

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For more details on UK tax identifiers, see our UK Tax ID Guide. To verify a UK VAT number, see our UK VAT verification guide or the live validator at /validate/united-kingdom/vat. For this week's roundup of these and other VAT changes, see Last Week in Taxes.