HMRC has launched a digital tool, so businesses can estimate how registering for VAT might affect them.
The tool allows users to experiment with inputs to consider how different situations would change their VAT position and what this might mean for their profits.
The estimator is free to use and should take around 20 minutes to complete.
VAT
Registered businesses must charge VAT on eligible sales and can usually reclaim it on eligible purchases.
You must register for VAT if your:
- total VAT taxable turnover for the previous 12 months is above the VAT threshold of £90,000
- expected turnover will exceed £90,000 in the next 30 days
- business is not based in the UK and supplies goods or services to the UK (or expect to in the next 30 days), regardless of VAT taxable turnover
You can also volunteer for VAT registration if your taxable turnover is less than £90,000, if you believe this will benefit your business.
Alternately, the VAT deregistration threshold is £88,000.
Most registered organisations submit a VAT return every 3 months (quarterly), where they must keep digital VAT records and use software to submit their returns.
Using the estimator
Input your approximate income and costs for the time period you wish to estimate, up to 12 months. Find this information in your business records, such as your annual accounts. If you’re setting up a new business, you can forecast these figures.
Choose the VAT rate(s) for your business income and costs. To do this, you’ll need to know what proportion of your income and costs are/will be exempt or out of scope for VAT. Consider if you would prefer to add VAT to, or absorb it into, your current/potential prices. You may need to check your invoices and VAT rates to decide.
Once you have completed the form, you can review your results and make a judgement from there.
Should you choose to register, you will need a Government Gateway user ID and password. If you don’t already have an ID, this can be created when you sign into the Gateway for the first time.
Note: If you register for VAT, you should not use these estimated figures to complete your VAT return.
Need some guidance?
HMRC will host a live webinar on 24 July 2024 to explain how to use the tool; it will be recorded and subsequently available to watch. on demand. Details of the live and recorded webinars will be available here…
If you require further guidance on VAT, please read how we can assist you here. Get in touch and a member of our team will be happy to help you.
