Do I Need to Register for VAT?
Thresholds, Flat Rate and the Traps
Cross the VAT threshold and registration is not optional.
Here is what to watch, and where businesses trip up.
By Seinthini Jeganathan, Accountant
VAT registration catches a lot of growing businesses by surprise. Here is when you must register, when you might choose to, and the traps to avoid.
When you must register
If your taxable turnover goes over £90,000 in any rolling 12-month period, you must register within 30 days. It is not measured against your accounting year or the tax year, it is a rolling 12 months, so you need to check every month. You also must register if you expect to go over £90,000 in the next 30 days alone. The deregistration threshold, if your turnover falls, is £88,000.
Registering voluntarily
You can register before you have to. It makes sense if you sell mainly to other VAT-registered businesses, who reclaim the VAT, and you have VAT on your own costs to recover. It makes less sense if your customers are the public, because adding 20% can simply make you more expensive.
The Flat Rate Scheme
Smaller businesses can pay a fixed percentage of turnover instead of tracking VAT on every purchase. It is simpler and sometimes cheaper, but not always, and “limited cost traders” pay a higher rate. It is worth doing the sums first.
The traps
Registering late is the big one: you owe the VAT from the date you should have registered, even if you never charged it to customers. Others include forgetting the rolling 12-month test, and one-off spikes in turnover that tip you over.
Thresholds are correct at the time of writing. We will confirm your position.
We monitor your turnover, warn you before you hit the threshold, pick the right scheme, and handle your returns, fully Making Tax Digital compliant.
