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Do I need to register for VAT?

The general rule of thumb is that you need to register for VAT if your taxable turnover is £85,000 or more in any 12 month rolling period. You can apply for an exemption from registering for VAT if you believe that your VAT taxable turnover will only briefly exceed the threshold i.e. you are expecting a large order next month that will take you over the threshold for VAT, but you fully believe that sales will drop in the following month.
To calculate your VAT taxable turnover, you need to add together the total value of UK sales that are not VAT exempt, including:
  • Business goods you've used for personal reasons
  • Services you received from businesses in other countries that are subject to the reverse charge (this means that you have to add the value of the services you've paid for into the value of your sales for the purposes of calculating your VAT taxable turnover)
  • Goods that have been hired or loaned to customers
You should still include goods and services that you've sold that are zero rated.

Is it worth registering for VAT?

There are many pros and cons when considering whether or not it is worth registering for VAT. We'll cover a few of them here:

Advantages of registering for VAT:

  • You could end up paying out more to HMRC if your output VAT (the VAT that you charge on sales) is higher than your input VAT.
  • You'll have to file a VAT return (usually quarterly) using MTD compatible software like Xero, Sage or Quickbooks (a list of which can be found here) most of which carry a cost and some of which are only accessible to accountants.
  • You'll spend more time on paperwork and less time on running your business.
  • If you deal primarily with retail customers (B2C) or non-VAT registered businesses then you'll either have to pass the cost on to them, or take the hit yourself.
If you're below the VAT threshold then it is definitely worth weighing up the pros and cons before making a decision. If you're above the VAT threshold then you're legally required to register.

How do I register for VAT?

This doesn't need to be as confusing as it might seem!
It's pretty easy to register for VAT by either logging in to your Government Gateway account and clicking on the link that says "get access to a tax, duty or scheme" or by following the HMRC guidance on VAT registration found here.

Need help with your VAT Registration?

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