VAT: Zero Rated vs Exempt Goods - What's the difference?

VAT Zero Rate 0% vs VAT exempt, what is the difference? If your goods are 0% rated, then how is this beneficial in comparison to being VAT exempt.......

🔴 VAT Playlist:
   • VAT Value Added Tax Explained - The Basics  

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⏱️ Time Stamps:
1:20 - What Are Zero Rated Supplies?
2:46 - Goods & Services to EU & Non-EU Countries from the UK
3:16 - What Are Exempt Supplies?

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A charge to UK VAT arises when a taxable supply of goods or services is made in the UK by a taxable person.
The term person can apply to an individual sole trader, partnership, Limited Company, LLP or any other body that supplies goods and services in the course of business.
A taxable supply is any supply of goods and services in the UK other than a supply which is specifically exempted from VAT. So a taxable supply includes standard rated (20%), reduced rated (5%) and zero rated (0%).

It's a tricky concept to get your head around, but zero rated supplies are technically a taxable supply. This can be extremely beneficial to your business if you are dealing in zero rated supplies, such as meat & poultry for example. Any VAT you incur, or input Value Added Tax, can be claimed back as your product is a taxable supply.

Exempt supplies on the other hand do not count as taxable supplies. Now if your business is supplying a combination of exempt, reduced rate, standard rate and zero rated items, it's strongly recommended you engage with an accountant you trust, as a VAT Evaluation will be extremely beneficial to your business.

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