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Handling your finances


If you run a business you’ll need to know about VAT rates and registration thresholds.  A VAT registered business charges VAT when selling goods or services and in turn they can generally reclaim the VAT they have paid on any goods and services purchased.

There are three rates of VAT, depending on the goods or services the business provides. The current 2015 rates are; standard @ 20%, reduced @5% (to include some goods and services, e.g. children’s car seats and home energy)and zero @0% ( to include most food and children’s clothes). There are also some goods and services that are exempt from VAT or outside the UK VAT system altogether.

A business should consider registration if VAT taxable turnover (for the last 12 months is more than £82,000 (April 2015 threshold for VAT registration).

A VAT taxable turnover is the total of sales and certain other supplies that are subject to VAT, including supplies that are zero-rated. If goods or services sales are exempt from VAT they’re not subject to VAT and so they’re not part of VAT taxable turnover.


There are many different types of insurance however for business the main ones are:

Public liability insurance

If members of the public or customers come to your premises or you go to theirs (including if you work from home), you should think about taking out public liability insurance. This insurance covers any awards of damages given to a member of the public because of an injury or damage to their property caused by you or your business.

Employers' liability insurance

Employers’ liability insurance enables businesses to meet the costs of damages and legal fees for employees who are injured or made ill at work through the fault of the employer. Employees injured due to an employer’s negligence can seek compensation even if the business goes into liquidation or receivership.

By law, an employer must have Employers Liability insurance and be insured for at least £5 million. If your business is not a limited company, and you are the only employee or you only employ close family members, you do not need compulsory Employers Liability insurance.

Professional indemnity insurance

If you are in the business of selling your knowledge or skills, you may want to consider taking out Professional indemnity insurance.

Professional Indemnity insurance protects your business against claims for loss or damage made by a client or third party if you make mistakes or are found to have been negligent in some or all of the services you provided. It will also cover legal costs. Many professions are required to have Professional Indemnity Insurance cover as a regulatory requirement or as part of their professional authorisation.

Business Rates

Business rates, also known as non-domestic rates, are taxes placed upon the occupation of non-domestic property such as property tax assessments and valuations.

Most premises used for business are subject to business rates. This includes commercial properties such as shops and factories although there are a few exceptions namely:

  • farm buildings and land
  • fish farms
  • places of worship and church halls
  • buildings used for the training or welfare of disabled people

You may be able to make minor business use of your home without paying business rates. But if you use part of your home exclusively for business (e.g. a workshop), you may be liable for business rates on it.