VAT Registration Questions
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:
- you want to apply for a ‘registration exception’
- you’re joining the Agricultural Flat Rate Scheme
- you’re registering the divisions or business units of a body corporate under separate VAT numbers