How to register for VAT in the UK
Ah, VAT, or Value-Added-Tax. Just what actually is it, when does your business need it, and how do you get started with it? Here’s our guide to registering for VAT.
What is VAT?
VAT is a tax charged by VAT-registered businesses on the majority of services and goods in the UK, on top of the sale price. If goods and services are imported from outside the European Union to the UK, VAT might also be charged on these.
Some goods and services are exempt from VAT - find out more about these here.
VAT-registered businesses might be charged VAT themselves when buying goods or services, but can usually reclaim this VAT. But if your business isn’t VAT-registered then it won’t be able to.
Businesses that sell products or services that are VAT-exempt are not able to register for VAT – sort of obvious really.
When to register for VAT
If your VAT-taxable turnover is more than £82,000 a year – by which we mean the turnover of all your goods and services that are eligible for VAT – you must register with HRMC. You can also register if your value is under this (unless all your services or goods are VAT-exempt), but this is optional.
In this case, the period of a year is defined as any rolling 12 month period – not a fixed period. So if your turnover tops the threshold within 12 months, regardless of when the 12 months started, you’re required to register.
When calculating the turnover, you also need to include:
- Goods you hired or loaned to customers
- Business goods used for personal reasons
- Goods that were part-exchanged, or given as gifts
- Building work over £100,000 that your business did for itself (so you supplied yourself with a service)
- Services you received from businesses in other countries that you had to reverse charge (more info about this here)
You should include any zero-rated items too - remember zero-rated and exempt from VAT are not the same thing. Yes, it's complicated.
You must register straight away if you expect the value of everything you sell in the UK which isn’t VAT-exempt to reach over £82,000 in the next 30 days.
If your business takes over another business that’s VAT-registered, and the combined turnover exceeds the threshold within 12 months, you also need to register.
If you’re trading outside of the UK, you need to register for VAT.
What do you need to register?
To register you'll need the following:
- Your National Insurance number, or unique taxpayer’s reference
- Certificate of incorporation, or your incorporation details
- Details of all associated businesses within the last two years
- Business bank account details
- If you’re acquiring another business, its details too
Most businesses will be able to register online. By doing this you’ll create a VAT online account that you will use to submit your VAT returns to HMRC. However, you can also appoint an agent or accountant to do it for you.
You can’t always register online; there are several reasons you might have to register by post, including if you import goods from another EU country or if you’re an EU business distance selling to the UK. Check to see whether you’re good to go online or have to put pen to paper here.
However, whatever route you take, you’ll have to submit your VAT returns and any payments online. You should get your VAT certificate within 14 days, either to your online account or by post (if done through an agent, or if you couldn’t do it online).
The registration date you’ll be given is known as your ‘effective date of registration’, and you’ll be paying HMRC any VAT due from this date.
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