What is VAT: When to Register, 2021 Threshold and VAT Schemes

Chris Andreou

July 2, 2021

vat threshold guide

Get Free Advice from an Accountant

Book a free 30 minute call with an accountant. We'll help walk through setting up your business, switching accountant or any of your tax queries. All our accounting packages come with a free 30 day trial.

Ultimate VAT Guide Download

Free Download: Ultimate VAT Guide

Download Now ↓
Tax

Introduction

VAT is simpler than it is usually made out to be, but you need to approach it step by step and crunch the numbers involved to find your best way to deal with it.

This is because, in addition to the normal way of paying VAT (known as the Standard Rate Scheme), HMRC also offers the Flat Rate Scheme, the Cash Accounting Scheme and the Annual Accounting Scheme for small businesses with turnover under a certain amount.

Each of these change your tax liability and how you pay in different ways. We shall deal with them at the end of the article.

The Standard Rate Scheme is the essence of VAT however, and it neither overly complex nor particularly difficult to get your head around.

What is VAT?

what is vat definition

Most of us are familiar with, or have a basic understanding of VAT (Value Added Tax).

It is a type of consumption tax added to the cost of most goods and services for both B2C and B2B markets. 

VAT is charged on: 

  • items sold to staff (i.e. staff canteen meals)
  • commissions
  • sale of business assets
  • business sales (i.e. goods or services you offer as a business)

Ultimate VAT Guide

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Ultimate VAT Guide

The 3 rates of VAT, and the 1 exception

Different goods and services are charged VAT at 1 of 3 different rates. Nearly everything falls within the 20% Standard Rate however.

Those 3 rates are:

standard rate vat 20%

Standard rate (currently 20%)

The standard rate applies to most goods and services. This is the rate that you should charge, unless the goods or services are classified as reduced or zero rate. 

It also applies to most services you supply to non-business customers in the EU. For EU business customers, there's a different set of rules that apply. 

Reduced rate VAT image


Reduced rate (currently 5%)

The reduced rate may apply depending on the type of product or service. It is generally charged on sanitary products, children's car seats and energy saving measures. 

The reduced rate may also apply based on the context of the sale.

For instance, it will apply to mobility devices if it is purchased by an individual over 60, and installed in his or her home. Any accountant should be able to quickly go over your sales and expenses and tell you which categories you do most of your business within.

Zero rate VAT


Zero rate (0%)

Zero-rated goods are still VAT-taxable, but the rate of VAT that you charge to customers is 0%. 

You are still required to record these sales in your VAT accounts, and report them on your VAT return. 

Some examples of zero-rated items include books, newspapers, children's clothes and shoes and goods you export to non-EU countries. 

Exempt VAT items


Exempt or out of scope items

There is also one instance where no VAT is charged, not even at zero rate.

A few examples of exempt items include insurance, medical services provided by doctors and postal service.

The full list of exempt items can be viewed on the Gov.uk website. These transactions should however still be recorded in your general business accounts. 

Out of scope items are outside the scope of VAT. As such, if you sell or purchase these goods and services, you can't charge VAT or reclaim the VAT on them. These items include employee salaries, charges imposed by the government and donations to a charity.

The first step: am I legally required to pay VAT?

Not all businesses are legally required to pay VAT.

If your turnover is below a certain threshold, you will have no legal obligation to pay VAT.

You must however register for VAT if:

  • your VAT taxable turnover exceeds the current threshold of £85,000 (for the 2021/22 tax year). The VAT taxable turnover refers to the total value of everything that you sell that isn't exempt from VAT. 
  • you expect your VAT taxable turnover to exceed £85,000 in the next 30-day period
  • your business had a taxable turnover exceeding £85,000 over the last 12 months

You need to register for VAT within 30 days of fulfilling any of these conditions.

If you fail to register on time, you'll need to pay what you owe from the date that the registration should have been effective. HMRC may also impose a penalty, depending on the amount you owe, how late your registration is and other situational factors. 

Step 2: Voluntary VAT registration? Benefits and downsides

In certain circumstances, it can be beneficial to register for VAT - even if you're not required to.

We've included the main benefits and downsides you need to consider below:  

VAT benefits of registering


The benefits:

  • It enhances the perception of your business. Registering for VAT tends to lend credibility to your business, and makes your company appear larger and more established. This can enhance your market appeal to other businesses and customers. 
  • You can reclaim VAT: You can reclaim VAT on goods and services you've purchased from other businesses, and this can be advantageous in certain situations. For example, you may be manufacturing and selling children's clothes (a zero-rated item), yet typically pay the standard VAT rate for most of your purchases - ranging from raw materials to manufacturing costs. If your input tax is higher than your output tax, you will be eligible for VAT refunds.
VAT downsides of registering

The downsides: 

  • Administrative burden. As a VAT-registered business, there are VAT rules and record keeping requirements you'll need to comply with. Some of these rules can be complicated, and you may be liable to a penalty if you make a mistake. 
  • It makes your goods or services seem more expensive. Charging VAT can make your goods and services more expensive - and therefore less appealing, particularly if your customers or clients are not VAT-registered business, or are end consumers who aren't able to reclaim VAT.  
  • You may be faced with an unexpected VAT bill. If your output VAT is higher than the input VAT, as it nearly always will be, then you need to pay the difference to HMRC. This can create cash flow issues if you're unprepared for an unexpected VAT bill. Bear in mind that at 20% these can get to be quite large.

Ultimate VAT Guide

What's Inside:

  • What is VAT
  • When to register for VAT
  • VAT rates
  • Exempt/ Out of Scope VAT items
  • VAT filing responsibilities
  • De-registering for VAT
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Ultimate VAT Guide

What's Inside:

  • What is VAT
  • When to register for VAT
  • VAT rates
  • Exempt/ Out of Scope VAT items
  • VAT filing responsibilities
  • De-registering for VAT

How to register for VAT

You can register for VAT online through creating a VAT online account (also known as the 'Government Gateway' account).

You'll need your online account to submit your VAT returns.

What do I need to do after I've registered for VAT?

Once you've registered for VAT, you'll need to:

  1. Abide by HMRC's record keeping requirements
  2. Issue VAT invoices
  3. Submit your VAT returns on time

1. Abide by HMRC's record keeping requirements

Starting 1 April 2021, UK businesses with a turnover exceeding the VAT registration threshold are required to follow the Making Tax Digital (MTD) rules. Businesses with a turnover below the threshold have the option of signing up for MTD voluntarily. From April 2022, it is mandatory for all VAT-registered businesses to comply with MTD, regardless of their annual turnover.

Under MTD, you're required to keep and maintain VAT records in “a compatible software package that allows you to keep digital records and submit VAT Returns” or use “bridging software to connect non-compatible software (such as spreadsheets) to HMRC systems”. And if more than one software package is used, the packages need to be linked digitally.

Records you need to keep digitally:

  • Business name, address and VAT registration number
  • Any VAT accounting schemes you use
  • The VAT on goods and services you supply, for example everything you sell, lease, transfer or hire out (supplies made)
  • The VAT on goods and services you receive, for example everything you buy, lease, rent or hire (supplies received)
  • Adjustments you make to a return
  • The ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you buy and sell
  • The rate of VAT charged on goods and services you supply
  • Reverse charge transactions
  • Total daily gross takings (if you use a retail scheme)
  • Items you can reclaim VAT on if you use the Flat Rate Scheme
  • Total sales and the VAT on those sales (if you trade in gold and use the Gold Accounting Scheme)

You're also required to keep digital copies of documents that cover multiple transactions made on behalf of your business by:

  • Volunteers for charity fundraising
  • Third-party businesses
  • Employees for petty cash expenses

Additional resources:


2. Issue VAT invoices

Depending on the type of VAT invoice you are issuing, you need to include the following:

Requirements by type of VAT Invoice
Requirements by type of VAT Invoice

*If items are charged at different VAT rates, you'll need to indicate the rates for each item.

3. Submit your VAT return

You will need to submit your VAT return online every quarter, even if you don't have VAT to pay or reclaim. How often you need to submit your VAT return may vary depending on the VAT scheme you choose, and we'll dive into this in further detail in the next section. 

Under MTD, the deadlines for submitting your VAT returns remain the same. You're required to submit a VAT return, and make payments a month and seven days after the end of a VAT period.

Here's an example: for a VAT period ending 31 March 2021, the due date for submission will be 7 May 2021. If you fail to submit your VAT return on time, you'll incur a penalty from HMRC.

What are my options if I can’t pay VAT?

Running into cash flow issues is a common problem for small businesses. If you find yourself faced with the situation where you’re unable to pay VAT, these are steps you can take: 

  • Submit your VAT return: Don’t put this off, even if you can’t pay.
  • Contact HMRC about setting up a Time to Pay (TTP) Arrangement: You might be able to set up a Time to Pay arrangement with HMRC, which allows you to pay your tax bill through a series of monthly instalments. Generally, TTP arrangements will not last beyond 12 months. In most instances, you’re expected to pay in full within three months.
  • How to contact HMRC: The method you should use to contact HMRC will depend on whether you’ve received a payment demand, such as a tax bill or letter informing you about legal action that will be taken. If you’ve received a payment demand, you need to call up the HMRC office that sent out the letter. If you haven’t received a payment demand, you should call the Payment Support Service
  • Work out your options: Speak to your accountant to draw up a plan on how you can meet your payments on time. You may look into small business financing options such as a line of credit or invoice factoring to help bridge your cash flow gap. 

Deferred VAT payments due to coronavirus

If you deferred VAT payments between 20 March and 30 June 2020 and still have payments to make, you have the following options:

  • Pay the deferred VAT in full on or before 31 March 2021
  • Join the new VAT deferral payment scheme, which is open from 23 February 2021, up until 21 June 2021. Under the new payment scheme, you have the option of paying the deferred VAT (due between 20 March and 30 June 2020) through a series of smaller, interest-free instalments. Instead of making the payment in full by 31 March 2021, you’ll have until the end of March 2022 to complete your payment. Refer to the Gov.uk guide for further information.
  • Get in touch with HMRC if you’re still unable to pay the VAT due, and need further assistance 

Cancelling my VAT registration

You may cancel your VAT registration online or by post. 

Online

You’ll need your Government Gateway user ID and password to cancel online.

Cancel by post

You’ll have to fill in the VAT7 form in full, before printing it out and posting it to HMRC. The address for mailing is included in the form.

It’s best to have all the information you need to fill in the form on hand, as you won’t be able to save a half-completed form.

VAT accounting schemes

In addition to the standard rate scheme, small businesses are also eligible for other VAT schemes.

These are intended to minimise the administrative burden and cash flow issues faced by small businesses. 

Standard rate scheme 

Under the standard rate scheme, you'll reclaim VAT on each item your buy or sell, paying HMRC 20% from your invoices. 

Flat rate scheme 

The flat rate scheme is available for small businesses, and was introduced to simplify the VAT process. 

Rather than pay out the difference between the VAT you've charged to your clients and the VAT on your purchases, you'll pay HMRC a fixed rate of VAT. 

To be eligible for the scheme, you need to have an annual turnover of £150,000 or less (excluding VAT).

For further information, refer to our article on the flat rate scheme and limited cost trader.   

Cash accounting scheme

Under the cash accounting scheme, you account for VAT on the date that you're paid - rather than the date that you send out an invoice.

This is particularly helpful for small businesses dealing with late payers or cash flow concerns, as you'll pay VAT only after you've received payment. 

To be eligible for the cash accounting scheme, your estimated turnover for the following tax year shouldn't exceed £1.35m. Once you're on the scheme, you can use it until your turnover reaches £1.6m.  

Annual accounting scheme

With the annual accounting scheme, you'll make VAT payments on account. You can make either nine monthly payments or three quarterly payments (along with a balancing payment), and are required to complete one annual VAT return. 

As with the cash accounting scheme, your estimated turnover for the following tax year shouldn't exceed £1.35m. And once you're on the scheme, you can use it until your turnover reaches £1.6m.  

Your turnover, cash flow pattern and the type of clients or customers you have are just some of the factors you need to assess when it comes to choosing a VAT scheme.

Get Free Advice from an Accountant

Book a free 30 minute call with an accountant. We'll help walk through setting up your business, switching accountant or any of your tax queries. All our accounting packages come with a free 30 day trial.

self employed tax guide
Featured Article

Self employed tax obligations guide

Here's what you need to know about paying taxes as a freelancer

Read more

Read More Guides below:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
VAT overview Guide

VAT overview

VAT is a type of consumption tax added to the cost of most goods and services for both B2C and B2B markets. There are three rates of VAT: standard rate, reduced rate and zero rate. VAT is not charged on exempt or out-of-scope items.

As a small business owner or self-employed worker, there are a few key aspects you need to understand about VAT. These are:

  • When is VAT registration mandatory?
  • If I'm considering voluntary VAT registration, what are the benefits and downsides I need to consider?
  • How do I register for VAT?
  • What do I need to do after I've registered for VAT?
  • VAT accounting schemes

We explain these in greater detail in our VAT guide.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I deregister for VAT? Guide

How do I deregister for VAT?

You can cancel your VAT registration online, or by sending form VAT7 via post.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Standard vs Flat Rate VAT Scheme Calculator Guide

Standard vs Flat Rate VAT Scheme Calculator

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
When do I pay VAT? Guide

When do I pay VAT?

The deadline for paying HMRC submitting your VAT return online are usually the same-one calendar month and seven days after the end of an accounting period.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I register for flat rate VAT? Guide

How do I register for flat rate VAT?

You'll first need to check that you're eligible for the VAT Flat Rate Scheme.

If you're eligible, you can join the scheme online when you register for VAT, or submit the VAT600 FRS through one of the methods below:

BT VAT

HM Revenue and Customs

BX9 1WR

You'll receive notification that you've joined the scheme through your VAT online account, or by post if you did not apply online.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
VAT Calculator Guide

VAT Calculator

Working out the VAT

With our calculator, you can work out your VAT in just a few quick clicks.

If the price doesn't include VAT:

  • Select the ‚ÄòAdd VAT' option
  • Select the rate of VAT on the slider
  • You'll obtain the gross price (inclusive of VAT) and the VAT element of the bill.

If the price includes VAT:

  • Select the ‚ÄòExclude VAT' option
  • Select the rate of VAT on the slider
  • You'll obtain the pre-VAT price (exclusive of VAT) and the VAT element of the bill.

VAT basics: What you need to know

VAT, or Value Added Tax is a consumption tax that is applied to most goods and services. While the standard rate (20%) applies in most cases, there are items-such as children's car seats and sanitary products-that are charged at the reduced rate of 5%. Using the slider on our calculator, you'll be able to calculate the VAT and gross or net prices for different VAT rates. If you're unsure about the correct rate you should apply, refer to HMRC's resource on VAT rates.

Resources:

-

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I register for standard rate VAT? Guide

How do I register for standard rate VAT?

Most businesses can register for VAT online, or appoint an accountant or agent to complete your registration and deal with HMRC.

There are certain instances where you must register by post. You should use the form VAT1 if you want to apply for a ‘registration exception', are joining the Agricultural Flat Rate Scheme or if you're registering the divisions or business units of a body corporate under separate VAT numbers.

Refer to the HMRC website for information on when you need to register by post using the form VAT1A, VAT1B or VAT1C.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Ultimate VAT Guide Guide

Ultimate VAT Guide

  • What is VAT
  • When to register for VAT
  • VAT rates
  • Exempt/ Out of Scope VAT items
  • VAT filing responsibilities
  • De-registering for VAT
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
The flat rate VAT scheme explained Guide

The flat rate VAT scheme explained

At first glance, VAT can seem like one more aspect of your business that adds to your administrative tedium. Yet, as a small business owner, you want to run your business in the most tax efficient way possible-and VAT is a common area where business owners are losing out.

Even if you've hired an accountant, you need to have a good grasp of the essentials.

Below, we'll dive into an aspect of VAT that business owners often raise questions about the flat rate VAT scheme. We'll run through the basics, touch on recent regulatory changes and share our answers to frequently asked questions about the scheme.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I pay VAT? Guide

How do I pay VAT?

There are various ways to pay your VAT bill.

Online or telephone banking (Faster Payments) and CHAPS payments are processed on the same day or the next working day.

Direct Debit, Bacs payments, standing order (only for businesses using the Annual Accounting Scheme or Payments on Account), online payments (by debit or corporate credit card) or payments made at your bank or building society are processed on a three day cycle.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I claim back VAT? Guide

How do I claim back VAT?

You can reclaim VAT by submitting a VAT return.

You need to have valid VAT invoices, keep records as proof for your claim and show how you calculated the business proportion of a purchase.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What are the disadvantages of VAT registration? Guide

What are the disadvantages of VAT registration?

The drawbacks of VAT registration are:

  • Administrative burden. As a VAT-registered business, there are VAT rules and record keeping requirements you'll need to comply with.
  • It makes your goods or services seem more expensive. Charging VAT can make your goods and services more expensive-and therefore less appealing, particularly if your customers or clients are not VAT-registered business, or are end consumers who aren't able to reclaim VAT.
  • You may be faced with an unexpected VAT bill. If your output VAT is higher than the input VAT, as it nearly always will be, then you need to pay the difference to HMRC. This can create cash flow issues if you're unprepared for an unexpected VAT bill.
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I find my VAT number? Guide

How do I find my VAT number?

You can locate your VAT number on the VAT registration certificate issued by HMRC. Your VAT number will contain nine digits, with the first two digits indicating the country code (‘GB' for UK businesses).

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Should I register for VAT? Guide

Should I register for VAT?

There are instances whereby VAT registration is mandatory, such as when your VAT taxable turnover exceeds the current threshold of £85,000. If you're not legally required to register for VAT, you'll then need to weigh out the benefits (enhances image, reclaim VAT) against the downsides (administrative burden, unexpected VAT bills).

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What are the VAT rates for different goods and services? Guide

What are the VAT rates for different goods and services?

There are three VAT rates: standard rate (20%), reduced rate (5%) and zero rate (0%). VAT is not charged for exempt or out of scope items, and the standard rate applies to most goods and services. Refer to HMRC's resource for further information on what VAT you should charge based on the type of goods or services you provide.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I find my VAT rate? Guide

How do I find my VAT rate?

NA

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What is VAT: registration, thresholds and schemes Guide

What is VAT: registration, thresholds and schemes

VAT is simpler than it is usually made out to be, but you need to approach it step by step and crunch the numbers involved to find your best way to deal with it.

This is because, in addition to the normal way of paying VAT (known as the Standard Rate Scheme), HMRC also offers the Flat Rate Scheme, the Cash Accounting Scheme and the Annual Accounting Scheme for small businesses with turnover under a certain amount.

Each of these change your tax liability and how you pay in different ways. We shall deal with them at the end of the article.

The Standard Rate Scheme is the essence of VAT however, and it neither overly complex nor particularly difficult to get your head around.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Can I claim VAT back on my mileage? Guide

Can I claim VAT back on my mileage?

You can reclaim VAT on the fuel portion of your mileage expenses if you don't pay a fixed rate under the Flat Rate Scheme.

You can reclaim all the VAT on fuel if you use your vehicle exclusively for business.

If your vehicle is driven for both business and personal use, you may handle VAT in the following ways:

  • Reclaim all the VAT and pay the fuel scale charge for your vehicle
  • Reclaim the VAT on fuel you use for business trips
  • Don't reclaim any VAT. This may be the better option if you use your vehicle for business purposes on rare occasions, such that the fuel scale charge exceeds the VAT you can reclaim.
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I register for VAT? Guide

How do I register for VAT?

You can register for VAT online through creating a VAT online account (also known as the 'Government Gateway' account). You'll need your online account to submit your VAT returns.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I find my VAT quarter? Guide

How do I find my VAT quarter?

NA

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What flat rate VAT percentage do I apply for multiple business sectors? Guide

What flat rate VAT percentage do I apply for multiple business sectors?

If your business can be classified under more than one sector because you provide different types of services or products, you'll then use the percentage that applies to the majority of your services or sales, and apply that to your total sales.

Let's say you're running a hair salon-cum-restaurant business. If 70% of your sales is derived from providing hair and beauty treatments, you'll then apply a VAT flat rate of 13% (for hairdressing and beauty treatment services) to your total turnover.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I calculate flat rate VAT? Guide

How do I calculate flat rate VAT?

The tax you pay is calculated by multiplying your VAT flat rate with your VAT-inclusive turnover. The flat rate you use will depend on the sector your business falls under.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What is the VAT Flat Rate Scheme? Guide

What is the VAT Flat Rate Scheme?

The VAT flat rate scheme is one of the various VAT schemes business owners can register for, in which a fixed rate of VAT is paid to HMRC. The scheme simplifies the VAT return process for small businesses, saving them the hassle of tracking VAT on purchases.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Switch from Standard VAT to the Flat Rate VAT Calculator Guide

Switch from Standard VAT to the Flat Rate VAT Calculator

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Should I charge VAT for international/ overseas sales? Guide

Should I charge VAT for international/ overseas sales?

Whether or not VAT should be charged on your sales to your overseas clients all depends on what HMRC refers to as the place of supply of your services.

Generally, if your client is a business customer, the place of supply will be where the client is based but if they are a non-business customer, the place of supply will be where you are based.

For most contractors, this means that your place of supply is generally where your customer is based.

If your place of supply is in another EU country, you do not need to charge UK VAT - providing they are a registered business in their country. You will need to request their VAT registration number and display this on your invoices. It will also need to be reported to HMRC within your VAT return and a separate EC sales list.

If your place of supply is in a country other than the EU then you do not need to charge VAT as it is outside the scope of VAT entirely. No further actions are needed for this other than not including VAT on your invoices.

If you are looking to check if you need to charge VAT or need assistance with any other VAT matters, contact one of our VAT experts today.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Do I need to register for VAT? Guide

Do I need to register for VAT?

You need to register for VAT if:

  • your VAT taxable turnover exceeds the current threshold of £85,000 (for a 12-month period ending in 2020/21). The VAT taxable turnover refers to the total value of everything that you sell that isn't exempt from VAT.
  • you expect your VAT taxable turnover to exceed £85,000 in the next 30-day period
  • your business had a taxable turnover exceeding £85,000 over the last 12 months

You need to register for VAT within 30 days of fulfilling any of these conditions.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What are the advantages of VAT registration:? Guide

What are the advantages of VAT registration:?

The advantages of VAT registration are:

  • It enhances the perception of your business: Registering for VAT tends to lend credibility to your business, and makes your company appear larger and more established.
  • You can reclaim VAT: You can reclaim VAT on goods and services you've purchased from other businesses, and this can be advantageous in certain situations.
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How do I set up a VAT Direct Debit Payment? Guide

How do I set up a VAT Direct Debit Payment?

You can use your VAT online account to set up a Direct Debit payment.

Do note that Direct Debit payments take at least three working days to clear. As such, you should set up the Direct Debit at least three working days before submitting your online VAT return, or the payment won't be processed in time.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What are VAT Returns? Guide

What are VAT Returns?

A completed VAT Return will either show how much is owed to HMRC or whether you're due a refund.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Managing invoices whilst waiting for VAT registration Guide

Managing invoices whilst waiting for VAT registration

During the time between submitting your application and waiting for your VAT registration number, you won't be able to issue VAT invoices or to show VAT as a line item on your invoices.

To get around this issue, you can include VAT in the invoice total amount-without indicating VAT as a line item or showing it in your invoice. For instance, if you're charging a client £100 for a service rendered, you'll invoice the client for £120 to account for the standard rate VAT of 20%.

When you've received your VAT registration number, you can then reissue the invoice for £100 (and include £20 VAT as a line item).

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
When do I need to register for VAT? Guide

When do I need to register for VAT?

VAT registration is mandatory when you fulfill the conditions indicated below, and you're required to register within 30 days of fulfilling any of these conditions.

  • Your VAT taxable turnover exceeds the current threshold of £85,000 (for a 12-month period ending in 2020/21). The VAT taxable turnover refers to the total value of everything that you sell that isn't exempt from VAT.
  • You expect your VAT taxable turnover to exceed £85,000 in the next 30-day period
  • Your business had a taxable turnover exceeding £85,000 over the last 12 months
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What are the advantages vs disadvantages of VAT registration? Guide

What are the advantages vs disadvantages of VAT registration?

The advantages of VAT registration are:

  • It enhances the perception of your business: Registering for VAT tends to lend credibility to your business, and makes your company appear larger and more established.
  • You can reclaim VAT: You can reclaim VAT on goods and services you've purchased from other businesses, and this can be advantageous in certain situations.

The drawbacks of VAT registration are:

  • Administrative burden. As a VAT-registered business, there are VAT rules and record keeping requirements you'll need to comply with.
  • It makes your goods or services seem more expensive. Charging VAT can make your goods and services more expensive-and therefore less appealing, particularly if your customers or clients are not VAT-registered business, or are end consumers who aren't able to reclaim VAT.
  • You may be faced with an unexpected VAT bill. If your output VAT is higher than the input VAT, as it nearly always will be, then you need to pay the difference to HMRC. This can create cash flow issues if you're unprepared for an unexpected VAT bill.
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
When should I charge VAT? Guide

When should I charge VAT?

You should charge VAT when your business becomes VAT registered-whether the registration is mandatory or voluntary.

VAT registration is mandatory when:

  • your VAT taxable turnover exceeds the current threshold of £85,000 (for a 12-month period ending in 2020/21). The VAT taxable turnover refers to the total value of everything that you sell that isn't exempt from VAT.
  • you expect your VAT taxable turnover to exceed £85,000 in the next 30-day period
  • your business had a taxable turnover exceeding £85,000 over the last 12 months

If you're thinking about registering for VAT voluntarily, these are the main benefits and downsides you should consider:

Benefits:

  • It enhances the perception of your business
  • Able to reclaim VAT

Downsides:

  • Administrative burden
  • It makes your goods or services seem more expensive
  • You may be faced with an unexpected VAT bill
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.