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VAT applies to most services by UK VAT-registered businesses; understanding VAT on services is essential for compliance and accurate accounting, covering intangible activities rather than physical goods.
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VAT must be charged if services are supplied in business, are not exempt, and place of supply rules confirm UK VAT applies; rates vary by service type and location.
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Standard rate (20%) covers most professional, maintenance, marketing, and IT services; reduced (5%) applies to select domestic fuels and renovations; zero rate (0%) includes exports and financial services.
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Exempt services include banking, insurance, medical care, education, Royal Mail postal services, betting, and burial services—no VAT charged on these categories.
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VAT timing depends on invoice date, payment, or service completion; business-to-business and business-to-consumer services follow different place of supply rules, including reverse charge in some cases.
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Common issues involve wrong VAT rates, incorrect place of supply, invoice errors, reverse charge omissions, and confusion between exempt and zero-rated services; thorough record keeping is critical.
Source: deeksvat.co.uk
