Every business in the UK that is providing taxable supplies must register for VAT if:
- their total VAT taxable turnover for the previous 12 months is more than £90,000 – known as the ‘VAT threshold’ – which until 31 March 2024 was £85,000
- they expect their turnover to go over the £90,000 VAT threshold in the next 30 days
- they are an overseas business not based in the UK and supply goods or services to the UK (or expect to in the next 30 days) – regardless of VAT taxable turnover.
A business whose turnover is below the above thresholds can still choose to register for VAT voluntarily. Implications for profitability of being VAT-registered may vary depending upon the nature of your customer base and your ability to charge the VAT without impacting sales, input VAT incurred on business costs and if the business is providing other exempt supplies such as rental activities.
HMRC has launched a digital tool called VAT Registration Estimator to help businesses estimate what registering for VAT may mean for them.
Before you start you will need information to hand about your business income and costs, and the VAT rates that apply to them. Do:
- read the information online about what the VAT Registration Estimator tool does and use the links to the guidance for more information
- input whether the business is, or will be, based in the UK
- input your approximate business income and business costs for the time period you wish to estimate, up to 12 months. You can also use this if you are setting up a new business
- use the guidance links provided to choose the VAT rate(s) for your business income and costs – as an estimated percentage of zero, reduced or standard rated, or VAT exempt, goods and services
- input if you would prefer to add VAT to, or absorb VAT into, your current or estimated selling price
- check your answers and complete the form to review the results, which you can save and print.
Additionally, HMRC hosted a live webinar on 24 July to explain how to use the tool, which can now be watched on demand. Details of all live and recorded webinars are available from the help and support for VAT guidance pages on GOV.UK.
Discover HMRC’s VAT Estimator Tool now
