Wenzo guidesWhat is the VAT threshold?
GOV.UK says a business must register for VAT if either:
- its total taxable turnover for the last 12 months goes over £90,000 (the VAT threshold), or
- it expects its taxable turnover to go over £90,000 in the next 30 days.
The 12 months are a rolling period, not your company’s financial year or the tax year. A business based outside the UK that supplies goods or services to the UK must register whatever its turnover.
What counts as taxable turnover?
Taxable turnover is the total value of everything you sell that is not VAT exempt or ‘out of scope’. It includes zero-rated and reduced-rated sales as well as standard-rated ones. It also includes:
- goods hired or loaned to customers
- business goods used for personal reasons
- goods bartered, part-exchanged or given as gifts
- services from overseas businesses you had to ‘reverse charge’
- building work over £100,000 your business did for itself
If you only sell VAT exempt or out of scope goods and services, you do not have to register.
Need help with your accounts instead?
We don’t handle VAT registration, but we can prepare your annual accounts and Company Tax Return. It’s £199 for turnover up to £90,000, or £499 for turnover above £90,000, bookkeeping included.
See our pricesWhen do I need to register by?
| Situation | Register by | Effective date of registration |
|---|---|---|
| Turnover for the last 12 months went over £90,000 | 30 days after the end of the month you went over | The first day of the second month after you went over |
| You expect to go over £90,000 in the next 30 days | The end of that 30-day period | The date you realised, not the date turnover goes over |
GOV.UK gives two examples. If a business’s turnover for the last 12 months reaches £100,000 for the first time on 15 July, it must register by 30 August and is VAT registered from 1 September. If a business arranges a £100,000 contract on 1 May, to be paid at the end of May, it must apply by 30 May and is registered from 1 May.
What happens if I register late?
You pay HMRC the VAT on sales made since the date you should have been registered, even if you did not charge your customers VAT. You might also pay a penalty, depending on how much you owe and how late you are.
Keeping your bookkeeping up to date during the year, rather than only at year end, makes this easy to stay on top of.
What if I only go over for a short time?
If turnover goes over the threshold only temporarily, you can apply for a registration ‘exception’. HMRC writes to confirm whether you get one; if not, it registers you.
A few other situations work differently:
- If most of what you sell is zero-rated, you can ask HMRC for an ‘exemption from registration’. If the application is rejected, HMRC registers you.
- If you take over a VAT-registered business, you must register if the combined taxable turnover of that business and yours is over the threshold.
Can I register voluntarily?
Yes. You can choose to register with turnover under £90,000. From the date HMRC registers you, you must charge VAT on taxable sales and pay HMRC any VAT you owe.
It is worth thinking about who your customers are first. VAT-registered businesses can usually reclaim VAT; consumers cannot. GOV.UK explains how to register for VAT.
How can Wenzo help?
Our packages cover a company’s annual accounts and Corporation Tax return, with bookkeeping included in the £199 and £499 packages. VAT registration and VAT returns are separate services and are not included in those prices.
If your company is VAT registered, send your VAT returns with your records so the year-end accounts agree with what HMRC has been told. You can see all three prices, check your dates with the deadline checker, or call us on 020 7123 9335.
What else might help?
Our guides to which records to send, dormant company accounts and Corporation Tax rates cover the rest of the year-end picture.
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Need help with your records?
Call or WhatsApp us for a free, no-obligation chat. No bookkeeping needed first: bank statements are enough to start.
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