When Do You Need to Register for VAT?
In the UK, businesses are required to register for VAT if they meet certain criteria.
If you are a health professional as detailed in paragraph 2.1 ‘Meaning of a health professional’, your services are exempt when certain conditions are met. The detailed notice and list can be found here
Therapists such as acupuncturists, psychotherapists, hypnotherapists and others who do not have statutory registers as described in paragraph 2.1 ‘Meaning of a health professional’ cannot currently exempt their services as of December 2024
Compulsory Registration
- Threshold Limit:
- Your business must register for VAT if your taxable turnover exceeds the VAT threshold, which is £90,000 (as of April 2024) in a rolling 12-month period.
- This threshold applies to the sale of taxable goods and services.
- Expecting to Exceed the Threshold:
- If you anticipate that your turnover will exceed the threshold within the next 30 days, you must register immediately.
Voluntary Registration
- Businesses below the VAT threshold can voluntarily register for VAT. This can be advantageous if:
- Your clients are VAT-registered businesses and can reclaim VAT.
- You want to enhance your business’s credibility.
How to Register for VAT
VAT registration can be completed online via the HMRC website. You will need:
- Your Unique Taxpayer Reference (UTR).
- Business bank account details.
- Information about your business structure and activities.
Upon successful registration, you will receive a VAT registration number and a VAT certificate.
What Happens After Registration?
Once registered, businesses must:
- Charge VAT: Add the appropriate VAT rate (standard, reduced, or zero) to all taxable sales.
- Submit VAT Returns: File VAT returns online, usually quarterly, showing the VAT you’ve charged and reclaimed.
- Pay VAT Due: Pay any VAT owed to HMRC by the deadline.
- Keep Records Digitally : Maintain accurate records of sales, purchases, and VAT charged or reclaimed.
Penalties for Non-Compliance
Failing to register for VAT on time or submitting incorrect returns can result in penalties. HMRC may impose fines based on the severity and duration of non-compliance. Timely registration and accurate record-keeping can help you avoid these issues.
