When to register for VAT

Do I need register with HMRC for VAT?

You must register with HMRC for VAT when your sales turnover reaches the VAT threshold of £90,000 (2024-25) in any rolling 12 month period.

If you use an accounting software you can easily keep track of this by running a report.

If you don’t use a piece of software you can use a simple Excel spreadsheet. Please feel free to download and use the one we have prepared for you.

You can also voluntarily register for VAT, but why would you do this? Well, if you are just starting out and you are incurring more vatable expenses than you are making sales, you could be due a rebate. But be careful and check your sums carefully.

How to register with HMRC

You can register online for VAT by logging into your account with your Government gateway ID.

Your VAT responsibilties

You cannot charge or show VAT on your invoices until you get your VAT number. However, you’ll still have to pay the VAT to HMRC for this period. You should increase your prices to allow for this and tell your customers why. Once you’ve got your VAT number you can then reissue the invoices showing the VAT.

Are my services Exempt from VAT?

This can be a very complicated area and one that is best for the professionals to help you with. You can call HMRC or talk with a VAT specialist if you believe or have been told your sales industry is not as clear cut as charging an extra 20% (2021-22) of VAT to your invoices.

If you need specialist help please contact us and we can give you details of someone who can help.

VAT on expenses

To ensure you are compliant with the laws of VAT you must make sure the purchase invoices above £250 contain:

• a UK VAT registration number, typically starts with GB followed by 9 numbers;

• the name and address of your business;

• name of the supplier;

• details of the purchases made and

• a breakdown of VAT

You cannot claim VAT on a proforma. Ensure you ask for a full invoice once you have made payment to the supplier.

You can only claim VAT on vehicles you use 100% for business and that does not include driving from home to work and vice versa.

When you calculate your first VAT return you can claim back the VAT on expenses for:

• 4 years of goods you still have, or that were used to make goods you still have and

• 6 months for services

You must keep all the records for VAT you are claiming for.

If you require help to prepare and submit your VAT returns please give us a call.