A guide to registering for VAT

What is VAT?

VAT, or Value Added Tax, is an additional tax on most products and services sold by VAT-registered businesses and is charged at a standard rate of 20% on top of your invoice values.

How do I know if I need to register for VAT?

Registering for VAT is compulsory if the following applies to you:

• Your total VAT taxable turnover for the last 12 months was over £90,000.
• You expect your turnover to exceed £90,000 in the next 30 days.
• You or your business is based outside of the UK (regardless of your annual turnover).

Being VAT registered means that you will need to:

• Add VAT to the price of all goods and services at the correct rate (currently 20% – 2024).
• Keep records of how much VAT you pay for things you buy for your business.
• Send a VAT return to HMRC each quarter – this should include the amount of VAT you charged your customers and the amount of VAT you paid to other businesses.
• Pay any VAT you owe to HMRC.

Can I register for VAT even if I don’t reach the threshold?

Yes, many businesses will choose to register even if their turnover is less than £90,000 and this is because of the many benefits that come with it.

These include:

• Being able to reclaim VAT on goods and services purchased for business reasons, where you have been charged UK VAT.
• It lends credibility to your business – your clients and customers can potentially reclaim the VAT you have charged them on invoices.
• It can give you access to a wider range of suppliers and clients due to the fact that most will only deal with VAT registered companies.

How do I register for VAT?

The easiest way to register for VAT is by creating an online account.

You’ll receive a 9-digit VAT number (that you’ll need to include on all your raised invoices), information about when to submit your first VAT return and payment, as well as a confirmation of your registration date (known as your ‘effective date of registration’).

As a VAT registered business, some of your responsibilities will include:

• Adding VAT to the price of all goods and services at the correct.
• Keeping records of how much VAT you pay for things you buy for your business.
• Sending a VAT return to HMRC each quarter – this should include the amount of VAT you charged your customers and the amount of VAT you paid to other businesses.
• Paying any VAT you owe to HMRC.

VAT Flat Rate Scheme

VAT schemes are used to simplify the way VAT-registered businesses can calculate and account for VAT to HMRC.

The VAT Flat Rate Scheme is the most well-known one and your turnover must be £150,000 or less to be able to join. You can read more about it here.

We hope you found this page helpful. If you’d like to sign up or need any further information, please give us a call on 01442 795 100 or you can email sophie.lewis@dolanaccountancy.com. Alternatively, contact us via live chat.