Is Flat Rate VAT applicable to Bank Interest?

[mikeguk]

Title pretty much sums up my question:

Do I have to include Bank Interest received in the Exempt income which I add to VAT income, when applying the flat rate percentage?

Thx
Mike

[DaveB]

VAT doesn't apply to bank interest. Bank interest is not VAT exempt because it does not fall within the VAT regime to begin with.

VAT exemption only applies to certain goods or services that would normally be VAT'able but for which the govt has granted a specific exemption - eg childrens clothes.

[boredsenseless]

VAT doesn't apply to bank interest. Bank interest is not VAT exempt because it does not fall within the VAT regime to begin with.

VAT exemption only applies to certain goods or services that would normally be VAT'able but for which the govt has granted a specific exemption - eg childrens clothes.

There are a number of VAT categories

Standard 17.5%
Reduced Rate (approx 5% for stuff like electricty bills)
Nil Rate (Exempt) 0% for food stuffs, train tickets and kids clothing
Non-Vatable 0% for monies received from interest or paid on bank charges, PAYE, Salaries etc

The 1st three need to be included on the VAT form the last one does not

[mikeguk]

I agree with all the above, except that my confusion stems from the fact that 'flat rate turnover' includes 'the value of exempt supplies'.

If interest is included as a non-vatable exempt supply, then should it be included in the turnover?

[DaveB]

No, it supplies as in things you supply to your customers that you charge VAT on.

[meridian]

I agree with all the above, except that my confusion stems from the fact that 'flat rate turnover' includes 'the value of exempt supplies'.

If interest is included as a non-vatable exempt supply, then should it be included in the turnover?

No, you are confusing the issue by calling it non-vatable exempt. As per the previous post there are 'exempt' and 'non-vatable' supplies. Interest is non-vatable.

[mikeguk]

Thanks guys, I think that's all helped.
Cheers