What is the Difference between UK VAT? How do i check a UK vat number

3
313

What is the Difference between UK VAT? How do i check a UK vat number

 VAT (value-added tax ) is a tax like GST but VAT is applicable in European countries. If u are selling less than 85 thousand pounds per year. Then you do not need to register for VAT.

If you are selling in UK market. And if you are not registered in VAT. Amazon charges an extra twenty percent on its fees. if you are registered then Amazon will not charge 20% extra fees.

Types of Amazon VAT

  1. INPUT VAT OR Mainstream VAT 20%
  2. OUT VAT OR Flatstream VAT 7.5%

INPUT VAT OR Mainstream VAT 20%

It is the VAT Or (uk vat zone) that you have to pay for item when you buy any type of your products or i explain VAT in simple meanings of word, when you order your product for production and when you get your products manufactured from supplier and import in UK United Kingdom. In case of uk vat zone DDP, 20% VAT is included in it along with other charges.

OUTPUT VAT OR Flatstream VAT 7.5%

Amazon UK VAT Number in which It is actually the tax that VAT registered sellers add to their selling price in production of product that is selling of Amazon in future. As a seller, you will include this VAT (either 7.5% or 20%) in your sale price per unit and collect it from your customer and this type of product tax apply as a VAT when buying from uk, then pay it to UK tax authorities/HMRC.

What is the Difference between UK VAT? How do i check a UK vat number
What is the Difference between UK VAT? How do i check a UK vat number

How to check a vat number online?

How can we check UK VAT Number Online For the UK you can dial Number or call the HMRC helpline (This is VAT Helpline: 0845 010 9000 open 8.00 am to 8.00 pm Monday to Friday) or use a mathematical check that the number is correct. To check that a UK VAT number according to your product becuase everyone have a differenet VAT Number so check it, is valid you should first check that it is 9 digits long.
 

Calculate UK VAT

  1. Multiply the price/figure by 1. + VAT Percentage.
  2. For example, the UK VAT rate is 20%, which means you would do price/figure X 1.2.
  3. For example, £100 is the price X 1.2 = £120 which is now the price/figure including VAT.
 
What is the Difference between UK VAT? How do i check a UK vat number

Is UK VAT rate Changing?

Due to the Pandemic Covid 19 businees was effected that’s Why Government doing some changin in package of measures to help businessess during this world level pandemic situation and the VAT rate was reduced to 5% on 15 July 2020 as part of the government’s.

Date VAT Rate VAT Fraction
15 July 2020 to 30 September 2021 5% 1//21
1 October 2021 to 31 March 2022 12.5% 1/9
1 April 2022 onwards 20% 1/6

Different VAT Scenarios for an Amazon Seller

As a seller, you can choose any one from the following three different scenarios:

1. You don’t get VAT registered

2. You get VAT registered at 20%. (Regular/Standard Rate VAT Scheme)

3. You get VAT registered at 7.5%. (Flat Rate VAT Scheme)

1) You don’t get VAT Registered

In this scenario, you are given a threshold of 85,000 pounds. In the starting you don’t have to get VAT registered but once your annual sale exceeds this threshold level, then you will have to get VAT registered.

ADVANTAGES

  • You can apply for VAT exemption.

DISADVANTAGES

  • Amazon will automatically start deducting 20% on each sale of your item and will pay it to HMRC as VAT on your behalf. E.g., you are a seller and selling in UK but not VAT registered and the price of your product is 20 pounds, then whenever that product sales out, every time amazon will automatically deduct 4 pounds as VAT from your sale price and will pay to HMRC by itself.
  • Amazon will also charge 20% VAT on other fee as well (like referral fee, FBA and monthly subscription fee etc.).
  • Suppose Amazon charges 15% referral fee on your sale price as fee for selling. And your sale price is 20 pounds then amazon will charge 15% as referral fee (that is 15% of 20 pounds = 3 pounds), and 20% VAT on this referral fee as well i.e., 20% of 3 pounds = 0.6 pounds. And now instead of paying 3 pounds as referral fee to amazon, you would be paying 3.6 pounds (3 pounds + 0.6 pounds) to amazon if you are not VAT registered. Similarly Amazon will also extra charge you on your monthly subscription fee and FBA fee @ of 20% if you are not VAT Registered. AND You can’t avail auto invoice generation facility.

2) You get VAT Registered at 20%

In this scenario, you have to pay 20% VAT (Output VAT) on the sale of each unit. This is the VAT % that you included in your sale price and hence collected from your customer buying from uk vat. You pay this VAT to HMRC after every three months on the combined sale of the quarter. Suppose, the total cost of your manufactured products (DDP) is 1200 pounds, out of which Input VAT (20%) that you had to pay was 200 pounds,

now when your sale starts and you have to pay VAT to HRMC on your sales, then say for examples the “Output VAT” you are eligible to pay on your sale after three months in 500 pounds, then while submitting your VAT Return, you will mention that you have paid 200 pounds as “Input VAT” while buying these products, and now your “Output VAT” is 500, so you are eligible to claim that 200 pounds of Input VAT, and in that case you will just pay 300 pounds as OUTPUT VAT to HMRC instead of 500 pounds

ADVANTAGES

  • Amazon does not deduct any VAT (Company number uk vat) from your sale value.
  • Amazon does not charge any VAT on referral fee, FBA fee and monthly subscription fee.
  •  You can claim Input VAT while filing VAT return after three months. Hence your Input VAT can be recovered.
  •  You can avail auto invoicing facility.
  •  Invoice defect rate can be reduced.

DISADVANTAGE

  • VAT% is high so your sale price would also be high as you will have to include this VAT% in your sale price.

3) You get VAT registered at 7.5%

In this scenario, you have to pay 7.5% VAT (Output VAT) on the sale of each unit. E.g., if your sale price of one unit is 20 pounds, then you will pay 1.5pounds as VAT. You pay this VAT to HMRC by submitting VAT Return to HMRC after every three months.

ADVANTAGES

  • VAT% is small.
  • Amazon does not deduct any VAT from your sale value.
  • Amazon does not charge any VAT on referral fee, FBA fee and monthly subscription fee.

DISADVANTAGES

  • You can’t claim Input VAT so the amount you had to pay as VAT (20%) at the time of buying your products from supplier cannot be recovered.

Which scenario is preferable?

Amazon uk vat number scenario is different for both Amazon Private Lable and Amazon Whole Sale.

FOR UK PL:

It is recommended to get VAT registered at 7.5% from the very first day, and once your sale gets increased, shift to 20% Regular VAT scheme.

FOR UK WHOLESALE:

It is recommended to get VAT registered at 20% VAT from day one. Because you have to pay 20% VAT on your buying in bulk, so if you are not 20% VAT registered then that Input VAT would be considered as your extra cost as you would not be able to claim that VAT on your sale.

What is the Difference between UK VAT? How do i check a UK vat number

Wanna follow our other Partner Websites? Here are those!

Metaverse New Era || 123 Web Plan || Lyrics OST

3 COMMENTS

LEAVE A REPLY

Please enter your comment!
Please enter your name here