HM Revenue and Customs (HMRC) has introduced the VAT Registration Estimator, a tool to help businesses understand the implications of VAT registration and its impact on profits.
Key Points
VAT Registration Requirements:
- VAT taxable turnover over £90,000 in the previous 12 months (increased from £85,000 on 31 March 2024).
- Expected turnover to exceed £90,000 in the next 30 days.
- Overseas businesses supplying goods or services to the UK must register, regardless of turnover.
VAT Obligations:
- VAT-registered businesses must charge VAT on eligible sales and can reclaim it on eligible purchases.
- Approximately 300,000 new VAT registrations annually.
Estimator Functionality:
- Shows potential VAT registration impact.
- Links to more information about the registration process.
- Useful for businesses below the threshold considering voluntary registration.
Using the VAT Registration Estimator:
- Requires business income, costs, and applicable VAT rates.
- Input data such as business location, income, and costs for up to 12 months.
- Guidance provided for VAT rates and VAT inclusion in selling prices.
- Save and print results.
- Free and accessible through Gov.UK, takes around 20 minutes to complete.
Tool Limitations:
- Guidance tool, not for bespoke business advice.
- Do not record input details, sessions end after 15 minutes of inactivity.
Upcoming Webinar: Live webinar on 24 July 2024 to explain tool usage, with recordings available on demand.
VAT-Registered Business Responsibilities:
- Charge VAT on sales of VAT-liable goods or services.
- Reclaim VAT on purchases from VAT-registered businesses.
- Pay difference to HMRC if VAT charged exceeds VAT paid.
- Claim VAT repayment if VAT paid exceeds VAT charged.
Registration Process:
- Requires Government Gateway user ID and password.
- Most businesses must keep digital VAT records and use software for VAT returns.
- Quarterly VAT returns submission.
- VAT registration threshold at £90,000 and deregistration threshold at £88,000 from 1 April 2024.
