What does it mean to Claim VAT back?

Cotta

This may sound like a silly question but what does it mean to Claim VAT back, is it a case of getting the actual money back or using the amount to offset against lower tax returns?

POPPYOSCAR

You need to be VAT registered in order to claim VAT back on purchases made in the running of your business.

You then have to make VAT returns that basically set out your VAT receipts .i.e received from your customers that you have charged them and the VAT paid on your purchases.

One is then deducted from the other and you either make a payment or claim back if your purchase vat is higher than your received VAT.

It has nothing to do with Income tax,

Hope that makes sense.

agrinnall

Or you could be a non-resident of the UK leaving the country with goods purchased here where it may be possible to put in a claim for a refund of VAT at the point of departure.

Pennywise

Or you could be self-building a house and able to reclaim some VAT from your spending on it.

If the OP could give some context as to what they think it means and for what purpose, we could give better answers.

planteria

POPPYOSCAR wrote: »

Hope that makes sense.

it does Poppyoscar. i run a small company that makes a profit each year. nowadays most of the income coming from outside of the UK, and so we collect less VAT than we used to. more often that not we claim back VAT on a quarterly basis.

Cotta

It's for a rental property.

00ec25

Cotta wrote: »

It's for a rental property.

PLEASE GIVE MORE CONTEXT

residential property?
commercial property?
owned by you personally?
owned by (your) company?

for residential property you must actively "Opt In" to VAT and until you do so you cannot reclaim VAT on any associated purchases. The reason it is unusual is obvious, not many tenants of a residential property are themselves able to recover the VAT you must charge on your rent

for commercial it is different

now please stop wasting people's time and explain exactly what you want to know

Cotta

It's a property I own, have a mortgage on and will be renting it out.

SuperHan

00ec25 wrote: »

for residential property you must actively "Opt In" to VAT and until you do so you cannot reclaim VAT on any associated purchases. The reason it is unusual is obvious, not many tenants of a residential property are themselves able to recover the VAT you must charge on your rent

Residential property is an exempt supply - you can't "opt to tax" it.


You therefore generally cannot claim input VAT on a residential property letting.

You may be able to claim something if you have another self-employed trade as well that you are already VAT registered for (which from your lack of understanding I would guess you don't).

You can opt to tax a commercial property. You can reclaim input VAT on a commercial property that you've opted to tax, but you have to charge VAT on rent which can increase your rent charges by 20%, so you'd need to consider whether you would then be competitive (if potentially letting to non-VAT registered businesses)