What is the VAT threshold?

As a UK business, you must register for VAT if you are making taxable supplies and your taxable turnover for the last 12 months exceeds £90,000, or you expect your turnover to exceed £90,000 in the next 30 days. Your taxable turnover is the total value of everything you sell that is not exempt from VAT (i.e. labour and materials).

It is important to keep up to date and monitor the level of your turnover if you are close to the VAT threshold. By doing so, you will be able to prepare for when your business is due to go over the threshold and can register on time to prevent any late registration penalties.

You have 30 days from the end of the month in which your turnover exceeds £90,000 to register with HMRC for VAT. 

If you are aware that sales in the next 30 days will push your annual turnover above the £90,000 threshold you should register for VAT by the end of that 30-day period.

If your turnover has not exceeded the threshold, you can voluntarily register for VAT and you may wish to discuss this with your accountant.

If you register for VAT late, you must pay the VAT on any sales made from when you should have registered. HMRC may apply a penalty depending on the circumstances.

If your turnover is only temporarily going to exceed the threshold, i.e. you had a large one-off contract, you can apply for a registration exemption. You will need to write to HMRC with evidence that your turnover will not exceed the de-registration limit of £88,000 in the next 12 months.

All VAT registered businesses should be signed up for Making Tax Digital for VAT. Therefore, all VAT records must be kept digitally and VAT returns should be submitted to HMRC using compatible software such as QuickBooks or Xero.

Keeping your records electronically also brings other benefits and can help you keep track of your turnover level.

If you need help with VAT registration, the VAT schemes available to you and help choosing a suitable software solution, don’t hesitate to contact us. Call us today on 01379 773117 or fill in our online enquiry form.

Date published 12 Sep 2023 | Last updated 5 Apr 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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