VAT for a new business
When starting out as a new business there are a list of things that you need to do, one of the first you will need to think about is do you need to register for VAT. This can seem like a daunting and confusing task for any business owner, we have detailed below a simple breakdown of the important rules to be aware of.
What is VAT and why do I need to account for it?
VAT (value-added tax) is a consumption tax that is included throughout the production stages and on the final sale of all goods (with a few exceptions). Any business that is registered for VAT will need to include VAT on any income made and then pay this across to HMRC through quarterly VAT returns, but don’t worry, while you have to pay VAT on your income you can also claim back any VAT you are charged on your expenses!
When do I need to register for VAT?
While most businesses will be registered for VAT it is not mandatory to register, and it may be that you never will need to register for VAT. You will only need to register if your income reaches the VAT register threshold, these are:
If your total taxable income for the last 12 months was over £85,000
If your expected turnover over the next 30 days will exceed the £85,000 threshold
If your expected annual turnover will exceed £85,000
Who must register?
Some businesses, regardless of if they reach the VAT threshold, will be required to register for VAT if any of the following are true for the business.
The business is based out of the UK
You are based outside of the UK
How to register for VAT
Registering for VAT is as simple as it can get, you can register online through your Government Gateway. During the registration process you will be asked to set up a VAT online account which you will use to submit your VAT returns and keep track of your payments and claims. Alternatively speak to us and we can either assist you in the set-up process or can complete the VAT registration on your behalf.
If you have any questions or need any assistance please get in contact with us, whether you are a new business just starting out or you are aiming to grow we can help out.
