How to Calculate VAT for Small Businesses

Blog > How to Calculate VAT for Small Businesses

Posted By Create


Are you charging the correct VAT rate on your products? Do you shock shoppers with hidden costs? You could be squandering potential sales, so don't be vague about VAT, offer clarity around inclusive / exclusive prices with the new VAT upgrade. Clear up the confusion, charge the correct rate for your products and improve your shoppers’ experience today! 


Charging The Correct Rate

UK VAT and legislation for businesses can be confusing and difficult to digest. Our aim is to help clarify these areas for you, the business owner, as well as for your shoppers. We have new update to the VAT system coming soon – and you could try it now! This is to support your needs as a business owner and help you to charge the correct VAT rates.

If you’re VAT registered, you must charge VAT when you make “taxable supplies”. What qualifies as a taxable supply, and the VAT rate you charge, depends on the type of goods or services you provide.

In 2015, changes surrounding the sale and supply of ‘digital products’ were enforced and this meant new EU regulations affecting the VAT rate charged. This should now be based on the country of ‘consumption’ not supply (for countries within the EU). Does this sound like hard work? Don’t worry, Create accounts have an EU Digital Services Tax feature to work this out for you!


Selling Online

For online businesses, VAT is not the only area of legislation to get right. As an online retailer, you are classed as a ‘Distance Seller’ and must adhere to regulations surrounding the information provided on your website. Read our guide on the Consumer Contracts Regulations for more details.


Displaying VAT In Your Shop

Get an exclusive look at our VAT upgrade coming soon! The update to your Shop settings, which applies to UK VAT only, allows you to assign VAT categories against products, which is then automatically calculated at the checkout. This helps you to comply with different VAT rates across different products (if required) which will offer precise reporting when you come to do your accounts.

Having a clear display of the cost of a product is a must for online shoppers. They want to know exactly how much this will cost them, including any tax, before they commit to purchasing.

The VAT upgrade also offers clarity over whether prices are inclusive or exclusive of VAT, displaying this on your product listings. Inclusive or exclusive of VAT is displayed next to your product price and is a great visual for your customers to see exactly what they are paying!

Stop VAT Confusion Costing You Sales

By offering an enhanced shopper experience you are boosting your chance of a successful sale. With our mobile-friendly “Basket & Checkout” (currently available to BETA users), you can clearly see each product cost and its applicable VAT at the buying stage.


Mobile-Friendly Shopping

The 'Basket' through to 'Checkout' process has been redesigned with an entirely mobile-friendly upgrade. This offers a new payment selection display and new features including an auto-selected delivery country. Not only will the updated design offer you an improved solution, but your shoppers will have an enhanced purchasing experience.

Features include:

  • A fully responsive solution for all devices
  • A new basket overview, including product thumbnail images
  • VAT (inclusive or exclusive) clearly displayed on orders
  • A new ‘Select Payment Type’ process and display
  • Auto location which means the ‘Country’ field in ‘Delivery Address’ will be pre-selected - clarifying those delivery charges for customers

Using the two upgrades combined provides a brilliant user experience for your shoppers.

Your Shopping Basket VAT


Improve Shopper Experience Today

Simply get in touch with your Account Manager who can add new upgrades to your account. The VAT upgrade is available on the Shop Builder Advanced package.

Not selling online yet? No problem – start your FREE trial today!

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