You must register for VAT if your VAT taxable turnover goes over £85,000 (the ‘threshold’), or you know that it will. Your VAT taxable turnover is the total of everything sold that is not VAT exempt. You can also register voluntarily.
How does the VAT threshold work?
When your turnover reaches the VAT threshold in a rolling 12 month period, you must start charging VAT from the first day of the second month after you exceed the threshold. When you expect to exceed the threshold in a single 30-day period, you must start charging VAT immediately.
Do Covid grants count towards VAT threshold?
The Government support package for Covid-19 includes grants available to small businesses that are currently impacted by the Covid-19 pandemic. In addition, for businesses that are not registered for VAT, this income does not count towards the VAT registration threshold.
What does income count towards the VAT registration threshold?
Any income that you receive that is not counted as ‘taxable turnover’ is excluded from the £83,000 turnover figure when calculating VAT registration threshold. This causes small businesses a surprising amount of problems, as they are often unsure what to include and what to leave out. What is taxable turnover?
Can a business be under the VAT threshold?
Similarly, the VAT threshold (2017-18 £85,000) cannot be avoided by artificially splitting a business into separate parts and arguing each part is under the threshold. However it can be possible for two people to own several businesses and treat each one separately for VAT purposes.
When does a business have to register for VAT?
By Andrew Needham, February 2017 When the taxable turnover of a business reaches the VAT registration threshold (currently £83,000 per annum), it must register for VAT. The key point here is the words ‘taxable turnover’.
Do you have to register for VAT if turnover exceeds £58, 000?
Your turnover then falls back to normal. In theory, you have to register for VAT as you have exceeded the £58,000 registration limit. However, under para 1 (3) of Schedule 1 of the VAT Act 1994, if you can show Customs that your turnover will probably fall below the £56,000 deregistration limit, you can avoid registering for VAT.
