Should I register my business for VAT?

Starting a business is an exciting time but it comes with a lot of responsibility. Suddenly, you are in charge of sales, marketing, customer support, finances and tax! Value Added Tax is a levy charged on businesses on the goods and services that they sell and is payable directly to the UK government. It is currently 20% of the base value of those services and goods being sold. It’s a lot to take on so here is a quick guide to when you need to register your business for VAT.

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A business will be required to pay VAT if the taxable turnover goes over the current registration threshold which is £85,000. It is important to register your business if during the last 12 months or less your VAT taxable supplies were more than £85,000. This also applies if you think that in the next month these taxable supplies will also exceed the £85,000 mark.

Be aware that if you buy and sell to the EU or in Northern Ireland then different thresholds apply.

So, how do you calculate VAT taxable turnover? Quite simply, this is the total amount of sales that fall over the threshold so are not subject to a VAT exemption. The amounts that need to be included are sales that attract standard VAT charges, those that attract reduced VAT and those that attract no VAT but not those that are exempt from VAT. For help with Accountants Swindon, visit a site like Chippendale and Clark Accountants Swindon

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There is a legal duty to register a business and there is a 30 day period for which to do so once turnover has exceeded the £85,000 threshold point. For businesses who reach the threshold but believe this will only be temporary, perhaps as a result of a one-off large sale, an exemption can be applied for.

Even if a business doesn’t meet the threshold for paying VAT, there are some instances when it might be beneficial to voluntarily register for VAT. These include:

• A VAT registered business will look bigger and more professional when dealing with other businesses.
• Finances could improve as a result of the amount of VAT that can be reclaimed on expenses.
• The VAT can be reclaimed by you from other businesses that you’ve paid who also pay VAT.
• It is a good way to future-proof your business by factoring in VAT prices to your business plan without readjusting for it in the future.

Registering for VAT is easy and can be done online on the government’s website. By creating an account, many aspects of managing a business can be completed online.

When charging VAT, it’s important to detail this on all invoices and sales, including how much it amounts to. For businesses who operate solely online, the VAT to be charged must be displayed at the checkout and the amount.