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A Comprehensive Guide to VAT on Services

  • 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.

  • 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.

  • 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.

  • Exempt services include banking, insurance, medical care, education, Royal Mail postal services, betting, and burial services—no VAT charged on these categories.

  • 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.

  • 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

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