Many sellers who are doing business on the Amazon UK platform are concerned, whether they need to register for the VAT or not. In this article, I would like to clarify you the answers to most common questions. There are 3 scenarios in UK VAT:
2- 7.5% VAT Flat Scheme.
3- 20% OF VAT.
1-0% VAT.
Whenever we are creating a new company in the UK and we start selling on Amazon. So, we have a threshold of £85000 per year.
What is a Threshold??
A benchmark is created and if you reached that limit of £85000,
You must be registered for the VAT. And you must pay the VAT tax To HMRC. On your transactions and sales, you will pay the VAT.
Thing We need to understand.
Many of us are realizing that we have a threshold of £85000 after crossed then we will pay VAT.
So, they are wrong.
It doesn’t mean that you should pay the VAT after crossing the threshold of £85000.
Every Country has a different time period to pay VAT.
But in the UK, you have to pay VAT on a quarterly basis.
Your sales will be monitored in every 3 months by yourself.
For example: In 1st quarter your sales are £25000 and so we can multiple with 4=£85000.
So, its means that you are eligible for VAT if your quarterly sales are more than £21250. And you must be registered your VAT as per HMRC policy.
1-The Advantage is of not registered VAT is
1-The VAT will not be charged to you.
2-The Disadvantage of not registered VAT is
1-You will be not able to an get auto Invoicing facility from Amazon.
2-Amazon will charge you 20% more tax on her fesses on our sales.
3- When we were buying or importing our products, The 20% VAT will be charged to us.
2- 7.5% VAT Flat Scheme.
What is the Threshold of 7.5% of VAT??
A benchmark is created and if you reached that limit of £280000 per year, you must be registered for the 20% VAT.
Your sales will be monitored in every 3 months by yourself.
For example: In 1st quarter your sales are more than £74000 so we can multiple with 4=£296000.
So, its means that you are eligible for 20% VAT if your quarterly Sales are more than £70000. And you must be registered your VAT as per HMRC policy.
On our per sale, we will pay 7.5% VAT.
And we will pay 7.5% of the VAT on our sales revenue at the end of the quarter and we will pay through Cash or Bank Transfer.
1-The Advantage is of not registered VAT is
1-You will be able to an get auto Invoicing facility from Amazon.
2-Amazon will not charge you 20% more tax on her fesses on your sales.
2-The Disadvantage of registered VAT is
1-The 7.5% VAT will be charged to us. We are also paying our vat on buying or importing our products.
2- When we were buying or importing our products, So, we will not able to claim our VAT from HMRC.
3- 20% OF VAT.
1-The Advantage of VAT is
1-You will be able to an get auto Invoicing facility from Amazon.
2-Amazon will not charge you 20% more tax on her fesses on your sales.
3- When we were buying products, we already pay our VAT to our supplier. So, we can be claiming our VAT from HMRC.
2-The Disadvantage of not registered VAT is
1-The 20% VAT will be charged to us.
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