When is it necessary to register your business for VAT?

Organising your tax registrations is a crucial initial step for new business owners. Understanding when and how to register for Value-Added Tax (VAT) can be perplexing for those new to entrepreneurship.

Here’s a clear guide to the VAT registration process.

Why is VAT Collection and Payment Necessary for My Business?

Value-added tax (VAT) is a tax on the added value at each stage of production and distribution of goods and services. Registering for VAT means you are responsible for collecting VAT on your sales and paying it to HMRC quarterly. It also allows you to reclaim some of the VAT you’ve incurred on eligible business expenses.

When Should You Register for VAT?

Not every limited company or sole trader must register for VAT. Typically, VAT registration becomes relevant when your turnover hits HMRC’s specified threshold, or if there’s a financial benefit in claiming certain expenses.

VAT registration is mandatory if:

• Your VAT taxable turnover in the last 12 months exceeds £90,000 (the HMRC VAT threshold effective from 1 April 2024).
• You anticipate that your turnover will surpass £90,000 in the next 30 days.

Who Else is Required to Register for VAT?

Even if you don’t meet the threshold, VAT registration is mandatory if your business:

• Is based outside the UK.
• Supplies goods or services to the UK (or expects to within the next 30 days).
• Initiating the VAT Registration Process

To register for VAT, you have two primary options:

1. Register online through your Government Gateway account, which sets up a VAT online account for managing payments and claims.
2. Have your accountant handle the registration. As your tax agent, we can register your business and assist in managing your VAT affairs.

Speak to us about getting registered for VAT

If you’re a new or existing business nearing the £90k VAT threshold, contact us for guidance on registration.

We’ll help assess your 12-month turnover and advise on the tax advantages of VAT registration for your business.

Contact us for a discussion about VAT registration specifics.