Yes, there is VAT on cleaning products in the United Kingdom. Cleaning services, including the materials used (e.g. cleaning fluids) and the goods you supply (e.g. toilet paper) are standard rated. Special rules apply only if you are doing “builders’ cleans” in the course of construction.
The general VAT rules apply to all businesses. They specify which size businesses need to register for VAT, different VAT rates (20 percent standard rate, 5 percent reduced rate, and exempt or zero rate), how VAT should be collected and paid to the government, and so on.
In response to the ongoing coronavirus outbreak, the Government last year announced a temporary reduction in VAT from 20 percent to 5 percent for some goods and services supplied by the tourism and hospitality sectors. The reduced rate is in force from 15 July 2020 to 31 March 2022 and applies to supplies of food, non-alcoholic drinks, tourist accommodation and attractions.
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Categories of Products or Services for VAT
There are three categories of products or service for VAT in the United Kingdom. The majority of goods and services, and even cleaning products, are Standard rated (subject to VAT at the standard rate, currently 17.5 per cent), some are ‘Exempt or Zero-rated’ and some are at a ‘Reduced Rate’ (currently five per cent).
Zero-rated supplies include water and sewage services, books, newspapers and leaflets, talking books for the blind, transport services, exports of goods, children’s clothing and shoes and for supplies of certain qualifying buildings such as newly constructed residential buildings and substantial reconstructions of protected buildings.
Exempt supplies are known to include supplies of land and buildings (except where the option to tax applies), financial and insurance services, postal services, betting and gaming, health and welfare services and education.
Reduced rate supplies include domestic fuel or power, installation of energy saving material, certain conversions of buildings into residential accommodation and also for renovation and alteration of residential buildings that have been empty for more than three years. Normally the renovation and alteration of buildings is standard rated.
With food shopping, things get more complicated. Staple foods, such as meat, poultry and fruit and vegetables are zero-rated – although you will pay VAT at the standard rate of 20 percent on other products you may deem equally necessary such as toothpaste and cleaning products. Equally confusing is that while VAT is payable on ‘luxury’ items such as sweets and snacks, items such as milkshakes, chocolate spread and tortilla chips are all zero-rated.
6 Ways to Reduce VAT and Keep Household Bills to a Minimum
Since 1973, the UK government has levied a Value Added Tax (VAT) on the price paid for certain goods and services. Presently the standard VAT rate is 20 percent, but there’s also a reduced rate of 5 percent and a zero rate that can apply instead.
Have it in mind that different VAT rules apply to the over 200 different types of business and almost all products in the United Kingdom. Therefore, it is always imperative to check the general rules on VAT. Take your time to note the difference between exempt and zero rates. Here are few tips to help you keep household bills to a minimum especially in terms of VAT paid on products.
Always compare shopping prices
Coupled with making sure you know the different VAT rates, always make sure you shop as cheaply as possible. For instance, compare prices of supermarkets’ groceries and products on shopping comparison website, Mysupermarket.co.uk.
Use the cheapest petrol station
Even though it’s clearly a bad advice to drive too far to the cheapest petrol station, you can compare the cost of fuel in your local area before you set off by typing your postcode into Petrolprices.com. Prices across the UK range from 119.9p a litre to 137.9p according to the website, so making a habit of using the cheapest forecourts can help reduce the effect of the VAT increase.
Make use of vouchers
January is always the leanest month of the year, so what better time to start using online vouchers to keep shopping bills down? You won’t be alone. According to reports, last year alone, Brits redeemed more than 2.4million discounts every day – a 25 percent rise on the previous year. The same report also stated that regular voucher-users save themselves an average of £660 a year which is not to be sniffed at.
Look out for special offers from retailers
Savvy retailers always strive for any opportunity to stand out from their competitors and, for many; this will now mean pledging not to pass on the VAT increase. Keep your eyes peeled for offers like this – especially on more expensive items such as cars, where the 2.5 percent rise in VAT will hurt the most.
Use a cash back credit card
Irrespective of what you buy, if you tend to pay with a credit card and clear the balance every month, consider switching to a cash back card. It simply means that you will earn money as you spend which could not only negate this month’s VAT hike – but put extra in your pocket. Notably, the current leader in the cash back credit card stakes is the American Express Platinum Cash back, which pays 5 percent on spending up to £2,000 in the first three months.
This would translate into £100 if you spent to that maximum. After this point, cardholders will earn up to 1.25 percent, depending on how much they spend. However, bear in mind the typical (APR) is a hefty 19.9 percent, which would soon eat away your cash back benefit if you failed to repay your balance.
Switch to a fix
For instance, if you are on a variable rate mortgage and worried about your monthly repayments growing with interest rates, consider switching to a fixed rate deal now while they are still cheap. Note that if you have 35 percent equity in your home, First Direct will offer a two-year deal priced at just 2.69 percent with a £999 fee. Howbeit, if you are tied into your current mortgage, you will need to factor any early repayment charges into what you save.
Value Added Tax – better known as VAT – is charged on most goods and services within the UK and the European Union. Weird anomalies entails that you pay tax on goods and services, despite the fact that many of them could be classed as essential.
The complexity of the system as well as the difficulty in changing the rules means there are a whole host of confusing quirks and strange peculiarities that exist and have put businesses and HMRC at loggerheads over the years. However, it is always advisable that you check the general rules on VAT always to know the right things to do.