VAT in the United Kingdom

In the United Kingdom, Value Added Tax (VAT) is levied by the HMRC on the goods or services provided by registered businesses. If your business has a turnover of more than £85,000 it is mandatory for you to register for VAT.

Note: This section is applicable only for the customers in the UK Edition of Zoho Books.

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VAT Settings

Configure VAT in Zoho Books

If your business is registered for VAT, you will be able to enter all your details and set up VAT in Zoho Books. You can find all your details in the VAT Registration Certificate you’ve received from HMRC.

To configure VAT in Zoho Books:

Accrual Basis VAT is calculated based on the Date of the Invoice.
Cash Basis VAT is calculated based on the date your customers have made payments to you.

Set up Flat Rate Scheme

Some eligible businesses, whose VAT taxable turnover is £150,000 or less (excluding VAT) can choose to join the VAT Flat Rate Scheme. Business owners registered for the this scheme pay only a fixed rate of VAT.

If your business is registered under the VAT Flat Rate Scheme:

Here is an example of how VAT is calculated normally vs the flat rate scheme:

Let’s say there are three items sold at £100 each. All three items carry a 20% VAT on them. Which makes the total sale value including taxes to £360. So the VAT paid will be:

Scheme Calculation
Normal VAT 3 items of £100 each sold at 20% VAT

Total sale value inclusive of VAT: £360
VAT: 20 + 20 + 20 = £60
Flat Rate VAT 3 items of £100 each sold at 20% VAT

Total sale value inclusive of VAT: £360
Flat Rate = 14%
VAT = 14% of 360 = £50.40

Note: VAT cannot be reclaimed if you have enabled the flat rate scheme.

VAT Return Settings

From April 2019, it is mandatory for all businesses in the United Kingdom to keep digital records of accounting and tax information for the entire financial year. You can choose to file your VAT returns directly from Zoho Books or if you are exempt from filing taxes digitally, you can do it offline.

To file your returns through Zoho Books:

Once done, you will taken to the VAT Filing section of Zoho Books to start filing your returns.

*Note:This option is currently available for customers in the beta version. Drop a mail at and we’ll enable this for you.

To file your returns offline:

VAT Rates

This section lets you view and manage all the VAT Rates you’ll be using in your organisation. Apart from the default rates, you will be able to add new rates, edit existing ones and delete them based on your requirements.

Add New VAT Rate

To create or add a new VAT rate:

Edit VAT Rate

To edit an existing VAT rate, follow the steps below:

Update Tax Rate

Delete VAT Rate

To delete an existing VAT rate:

Delete tax

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