From VAT registration through to deregistration, we offer the complete service. We can guide you through the complex issues surrounding VAT and the obligations faced by your business or individual needs and using making tax digital (MTD) compatible software.

What is VAT?

Value Added Tax (VAT) is the tax on products and services that are sold in the UK. It is based on the value of the product or service being sold.

VAT-registered businesses have to charge VAT on all their taxable sales, whether it’s to consumers or other businesses. This type of VAT charged on goods sold to buyers is called output VAT.

Businesses can reclaim most of the VAT charged to them by their suppliers. This type of VAT is called input VAT.

Who needs to register for VAT?

Businesses that have an annual turnover that exceeds the VAT threshold have to register for VAT. Businesses who will go over the VAT threshold in the next 30 days must also register for VAT. This is why it’s important to always keep an eye on your taxable sales.

The current VAT threshold is £85,000. The threshold generally changes every year.

Businesses with annual taxable sales below the VAT threshold still have the option to register for VAT.

For businesses that only make VAT-exempt sales, they cannot register for VAT. Examples of VAT-exempt goods and services are education, insurance, and health services.

Making Tax Digital and VAT

VAT-registered UK businesses with an annual turnover above the VAT threshold are legally obligated to keep digital VAT records and submit VAT returns using Making Tax Digital-compliant software. Businesses below the VAT threshold have the option to sign up for MTD for VAT.

If your annual turnover goes below the VAT threshold, you still have to keep digital records and send VAT returns with MTD-compliant software.