Small Business Accounting

What are Taxable Supplies?

By

Chris Andreou

What are Taxable Supplies? guide

Contents

A taxable supply is any supply made in the UK which is not exempt from VAT.

What are Taxable Supplies?

If you are setting up or have just started a business in the UK, it is important to understand what taxable supplies are and how they affect your business. Taxable supplies are goods and services that are subject to VAT (Value Added Tax) when they are sold in the UK. This means that you must charge your customers the current rate of VAT on any goods or services you provide, and then pay the VAT to HMRC (Her Majesty’s Revenue and Customs).

In order to understand what taxable supplies are, it is important to understand the concept of VAT. VAT is a tax that is applied to goods and services that are sold in the UK. It is a type of indirect tax that is collected by the government from businesses and consumers. VAT is charged at different rates depending on the type of goods or services that are being sold. The standard rate of VAT is currently 20%, but there are also reduced rates of 5% and 0% for certain goods and services.

When it comes to taxable supplies, the main thing to remember is that any goods or services that you provide must be subject to VAT. This means that you must charge your customers the current rate of VAT on any goods or services you provide, and then pay the VAT to HMRC. It is important to note that there are some goods and services that are exempt from VAT, such as certain food items, books, and health services.

In order to ensure that you are correctly charging and paying the correct amount of VAT, it is important to understand what counts as a taxable supply. Generally speaking, any goods or services that you provide in exchange for money are considered to be taxable supplies. This includes goods that you sell, services that you provide, and even digital services such as website design and software development.

It is also important to note that some goods and services are subject to different rates of VAT. For example, the standard rate of VAT is 20%, but some goods and services such as energy-saving materials and children’s clothing are subject to a reduced rate of 5%. It is important to be aware of the different rates of VAT and to ensure that you are charging the correct rate to your customers.

Finally, it is important to remember that you must also register for VAT if your business’s taxable supplies exceed a certain threshold. This threshold is currently £85,000, so if your business’s taxable supplies exceed this amount then you must register for VAT and start charging the correct rate of VAT on all of your taxable supplies.

In summary, taxable supplies are goods and services that are subject to VAT when they are sold in the UK. It is important to understand what taxable supplies are and how they affect your business, as you must charge your customers the current rate of VAT on any goods or services you provide and then pay the VAT to HMRC. There are also different rates of VAT for certain goods and services, and you must also register for VAT if your business’s taxable supplies exceed a certain threshold.

<p>A taxable supply is any supply made in the UK which is not exempt from VAT.</p>

Read more of our Small Business Accounting guides:

Business accountant available for free consultation

Get a free accounting consultation

We'll walk through everything you need for starting or switching.