VAT Registration Questions

VAT Registration Questions

vat registration

Required Registration

Currently, the VAT registration threshold is £85,000. If your turnover (on non-exempt items, see below) is over that threshold, you have to register. For more detailed explanation, see the gov.uk writeup on VAT registration

You can register voluntarily if your turnover is below this threshold, unless all your turnover is exempt. 

Exactly what does the £85,000 turnover mean?

  • you expect your VAT taxable turnover to be more than £85,000 in the next 30-day period
  • your business had a VAT taxable turnover of more than £85,000 over the last 12 months

Exempt Turnover and VAT Rates

Certain types of turnover are “exempt” from VAT. Note that this is different from being “zero rated”. In addition, there is the “reduced” rate. 

These rules can change, and the precise list of items in each category is very large – HMRC has produced a detailed guide. 

Exempt items include:

  • Sports activities
  • Betting and gaming
  • Burials and cremations

Zero-rated items include:

  • Certain charitable activities
  • Equipment for disabled people
  • Incontinence products

Reduced rate items include:

  • Quitting smoking products, including gum and patches
  • Sanitary products and maternity pads
  • Residential gas and electricity

If you supply exempt, zero-rated or reduced rate items, it’s critical you charge the right rates of VAT. Usually, this will require software, and correctly mapping your sold products into categories. 

Andach can recommend and install this software as part of our cloud computing service. 

Exempt

Exempt products don't have VAT charged on them. Unlike zero-rated products, sale of this doesn't count for VAT registration.

Zero Rated

Zero rated products don't have VAT charged on them, but these do count towards VAT registration.

Reduced Rate

The current reduced rate of VAT is 5%.

Standard

Standard rated items have VAT charged at 20%.

VAT Responsibilities

If you’ve decided to register voluntarily, or hit the VAT threshold and have to register, you need to register online. You can do this yourself, but Andach is happy to act on your behalf as your accountant. 

There are certain exceptions that mean you don’t have to register online, and can/must use a paper form instead. You must do this if:

Regardless of why you’ve registered, you’re now responsible for charging the right amount of VAT, keeping appropriate financial records, submitting your VAT returns and (of course) paying your VAT to HMRC.