28 Feb Should I register for VAT?
One of the questions we get asked regularly is if you should register for VAT or not. Hopefully, with this blog, we’ll try and answer all the questions you may have. There are some considerations, but it’s not all bad!
When should I register for VAT?
The easiest answer to this is that if your turnover is likely to go over £85,000 (that is either you or your business), then yes you do need too. However, this turnover only includes everything which you have sold which is NOT VAT exempt.
So for example, if you have a turnover of £10,000 for one month, you then need to look back at the past 12 months to see if this took you over the £85,000. If it does, then you will need to register for VAT. This needs to be done within the next 30 days.
You also have the option to register voluntarily.
Does the threshold change?
For the next couple of years, no. The chancellor has confirmed that it will stay at £85,000 for 2018/19 and 2019/20. However, it can do.
It’s always worth keeping an eye on the government website for the latest updates about business tax.
What are the benefits of registering voluntarily?
One of the main reasons a company will do this is because it makes their company appear to be larger than it is. This is because most people will assume you’re at the threshold turnover.
The second reason is that you can claim the VAT back. This is the VAT that other businesses charge you as part of doing business with them.
Are there exceptions?
If you think your going over the threshold is not likely to be a permanent thing, then you can apply for an exception. However, you’ll need to prove that this is a one-off occurrence. So for example, if you had an unexpected sale of property, for example, this could be classed as a one-off, and an exception.
This all sounds really complicated!
If the turnover of your business fluctuates, then we’d recommend that you talk to an accountant! Of course, we’d say this, but if your business turnover is anything but steady, then you will save yourself money in the long run!
Please get in touch if you wish to have a chat about if VAT registration is a good option for your business.