Navigating VAT Threshold Changes: Your Guide to Registration and Deregistration

As of 1 April 2024, the VAT landscape has shifted with adjustments to registration and deregistration thresholds. Understanding these changes is crucial for UK businesses to stay compliant and make informed decisions. At Jon Davies Accountants, we’re here to break down the complexities and offer practical advice tailored to your circumstances.

When is VAT Registration Mandatory?

If your taxable turnover over the past 12 months surpasses £90,000 or is expected to exceed this threshold within the next 30 days, VAT registration is mandatory. This also applies to businesses based outside the UK supplying goods and/or services to the UK.

Understanding Taxable Turnover

Taxable turnover, not to be confused with total turnover, comprises supplies subject to VAT. Exempt supplies are excluded from this calculation.

Registration Deadline

For businesses exceeding £90,000 in turnover over the past 12 months, registration must occur within 30 days following the end of the month in which this threshold was reached. The effective registration date is the first day of the second month after surpassing the threshold.

Voluntary Registration Considerations

Even if your turnover falls below the VAT threshold, voluntary registration might be advantageous, particularly if you mostly deal with zero-rated supplies but incur VAT on purchases. However, voluntary registration entails charging VAT to customers and complying with Making Tax Digital (MTD) for VAT.

Deregistration Opportunities

With the deregistration threshold now at £88,000, businesses previously hovering above the old £85,000 limit but below £88,000 have the option to deregister. This can enhance competitiveness and relieve administrative burdens, but it means forfeiting input VAT recovery.

Making Informed Decisions

Assessing the pros and cons is vital before opting for voluntary registration or deregistration. Our team at Jon Davies Accountants can provide tailored guidance to ensure you make informed decisions aligned with your business goals.

Ready to navigate VAT changes effectively? Contact Jon and our team today for expert advice tailored to your unique circumstances.

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Any questions?

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