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Do I need To Be VAT Registered?
Posted by
CraigDBarnes
,
14 February 2013
·
1,153 views
AccountingBusiness VAT
VAT stands for Value Added Tax and if you’re self-employed it could seem like an incredibly tricky subject. The issue of whether you need to be VAT registered is one that comes up often, as it all depends on your annual earnings.
Who can become VAT registered?
This is one of the first things you’ll need to find out. You will be able to register if you are:
- An individual
- In a business partnership
- Part of a company
- In a club
- Included in an association
- A founding member of a charity
- An owner of a trust
- A local authority
- Working on your own or as a group with a specified name
Who can’t become VAT registered?
If the products that you sell as part of your business are exempt from VAT, or the HMRC doesn’t see your organisation as a business, you do not have to register for VAT.
When do I need to become VAT registered?
If your earnings as a self-employed individual or business go over the current threshold for VAT, then it is your responsibility to register yourself. This threshold is £77,000 at the moment.
You must register if you are:
- Supplying products or services to countries in the EU.
- Supplying products or services to countries outside of the EU.
- Taking over the management of a business that is currently VAT registered – your own VAT over the last 12 months will be added to this, meaning you may go over the taxable threshold.
- Purchasing goods from other EU countries to sell.
Can I register for VAT even if my turnover is below the threshold?
Yes, although this comes with its own range of pros and cons. You will need to assess your situation to see whether you would benefit from doing this.
The pros include:
- You could be eligible for a VAT refund.
- You won’t be charged a penalty for going over the threshold.
- Your business may become more reputable for being VAT registered.
The cons include:
- You will have to keep a much closer eye on your finances.
- Though you can claim back VAT unnecessarily paid, you will have to pay it in the first instance which can increase your overheads.
Knowing when to register for VAT can be difficult, especially if you don’t have a good understanding of your business’ finances. The first thing to do is figure out exactly how much money you earn in a year to see whether you are close to the threshold. If you are, voluntary VAT registration may be the way to go.
This article was written by Aurora Johnson on behalf of Nixon Williams, a contractor accountant in the UK.
Who can become VAT registered?
This is one of the first things you’ll need to find out. You will be able to register if you are:
- An individual
- In a business partnership
- Part of a company
- In a club
- Included in an association
- A founding member of a charity
- An owner of a trust
- A local authority
- Working on your own or as a group with a specified name
Who can’t become VAT registered?
If the products that you sell as part of your business are exempt from VAT, or the HMRC doesn’t see your organisation as a business, you do not have to register for VAT.
When do I need to become VAT registered?
If your earnings as a self-employed individual or business go over the current threshold for VAT, then it is your responsibility to register yourself. This threshold is £77,000 at the moment.
You must register if you are:
- Supplying products or services to countries in the EU.
- Supplying products or services to countries outside of the EU.
- Taking over the management of a business that is currently VAT registered – your own VAT over the last 12 months will be added to this, meaning you may go over the taxable threshold.
- Purchasing goods from other EU countries to sell.
Can I register for VAT even if my turnover is below the threshold?
Yes, although this comes with its own range of pros and cons. You will need to assess your situation to see whether you would benefit from doing this.
The pros include:
- You could be eligible for a VAT refund.
- You won’t be charged a penalty for going over the threshold.
- Your business may become more reputable for being VAT registered.
The cons include:
- You will have to keep a much closer eye on your finances.
- Though you can claim back VAT unnecessarily paid, you will have to pay it in the first instance which can increase your overheads.
Knowing when to register for VAT can be difficult, especially if you don’t have a good understanding of your business’ finances. The first thing to do is figure out exactly how much money you earn in a year to see whether you are close to the threshold. If you are, voluntary VAT registration may be the way to go.
This article was written by Aurora Johnson on behalf of Nixon Williams, a contractor accountant in the UK.
