Understanding when and how to register for VAT is crucial for entrepreneurs and small business owners. If you find yourself questioning whether you need to register for VAT, or how to go about it, this friendly guide is here to help you.

When is VAT Registration Required?

If you make VATable supplies, you’ll need to register for VAT if:

  • Your taxable turnover for the last 12 months exceeded £85,000.
  • You expect your VAT taxable turnover to surpass £85,000 in the next 30 days.

Notably, the current VAT registration threshold is set at £85,000.

What are Taxable Supplies?

Taxable supplies include anything made in the UK that isn’t exempt from VAT. Even supplies liable at the zero rate of VAT fall into this category, along with those charged at the standard and reduced rates. Remember, exempt supplies don’t count when determining whether you need to register for VAT.

Voluntary Registration

Here’s where it gets interesting. Even if your taxable turnover is below the £85,000 threshold, you can opt for voluntary registration. This can be a smart move if your input VAT’s value exceeds your output VAT’s value, as you can reclaim the difference from HMRC. For instance, this may be the case if you predominantly sell zero-rated items like certain food products or children’s clothing.

When to Register for VAT

If you’re approaching the £85,000 threshold, here’s what you need to know:

  • Within 30 Days: If your VAT taxable turnover exceeds £85,000 in the last 12 months, you must register within 30 days of the month-end when you crossed the threshold.
  • Within 30 Days (Future Projection): If you expect to exceed £85,000 in the next 30 days, you must register by the end of that period.
Example
  • Molly crossed the £85,000 threshold on 2 August 2023. She must register by 30 September 2023, with her VAT registration effective from 1 October 2023.
  • Paul, having agreed to a £120,000 contract on 6 August 2023, must register by 5 September 2023, with his registration effective from 6 August 2023.
How to Register

You can register for VAT online via the gov.uk website, or ask your accountant or agent to handle it for you.

VAT registration may seem complex, but it doesn’t have to be. Whether you’re considering voluntary registration or have crossed the mandatory threshold, understanding your obligations is key.

 
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Any questions?

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