There are some zero-rated VAT goods and services – like food, sale of antiques, fundraising, medical care and property licensing – but it is unlikely you will need to worry about these as a contractor. Your accountant will inform you if anything you provide is VAT exempt.
Do I have to register for VAT?
If your turnover exceeds £85,000, or you expect it to exceed £85,000 in the next 30 days, you must register for VAT. Once registered for VAT, you need to begin charging VAT on all goods and services you sell. This applies as soon as you register – you don’t wait until you receive your certificate.
My turnover won’t exceed £85,000 – do I still need to register?
You don’t need to register for VAT if you don’t hit the registration threshold. However, there are still reasons you may wish to register, as it can provide a benefit to your business.
Benefits of VAT registration
Even if you are below the threshold, you may wish to consider VAT registration for the following reasons:
- You can reclaim VAT on goods and services purchased by your company, where you have been charged UK VAT.
- Many clients and suppliers, especially larger ones, will only deal with VAT registered companies. This gives you access to a wider range of suppliers and clients.
- Being VAT registered lends credibility to your business. Your clients and customers can potentially reclaim the VAT you have charged them on invoices.