The Standard Rate of VAT
The standard rate of VAT has changed over time, but since 4 January 2011 the rate has been 20%.
The Reduced Rate
The reduced rate of VAT has remained at 5%, even when VAT has varied from 15% to 17.5% to 20%. The reduced rate applies to very few supplies, but may be seen on supplies of power.
More importantly for academies the threshold at which VAT registration becomes compulsory has changed regularly.
The threshold has been as follows:
- From 1 April 2017 onwards: £85,000 (this threshold has now been pre-announced as remaining fixed until 31 March 2022)
- From 1 April 2016 to 31 March 2017: £83,000
- From 1 April 2015 to 31 March 2016: £82,000
- From 1 April 2014 to 31 March 2015: £81,000
- From 1 April 2013 to 31 March 2014: £79,000
- From 1 April 2012 to 31 March 2013: £77,000
- From 1 April 2011 to 31 March 2012: £73,000
The supplies that count towards the registration threshold are:
- Standard rated supplies
- Reduced rate supplies
- Zero-rated supplies
- "Reverse charge" situations
Do not count the following:
- Non-business supplies (i.e. grant-funded income)
- Other supplies outside the scope of UK VAT
- VAT exempt supplies (even if a business supply)
- Capital items like buildings, equipment and vehicles
The value of relevant supplies needs to be checked every month, looking back over a rolling 12-month period.
The "VAT fraction" is the proportion of the sale price of goods or services that relates to VAT.
Since 4 January 2011 the VAT fraction for standard-rated sales is 1/6th.