HM Revenue & Customs (HMRC) has introduced a new tool designed to assist businesses in understanding the implications of VAT registration.

VAT Registration Criteria

VAT registration becomes mandatory if:

  • Your total taxable turnover exceeds £90,000 over the previous 12 months.
  • You expect your taxable turnover to exceed £90,000 in the next 30 days.
  • You are based outside the UK and supply goods and services to the UK.

Taxable turnover refers to the total value of everything you sell, excluding items exempt from VAT.

Voluntary VAT Registration

Businesses can also voluntarily register for VAT even if their annual taxable turnover is below £90,000. If most of your customers are VAT registered, voluntary registration can be beneficial, allowing you to claim back VAT on purchases.

Benefits of the New HMRC Tool

The new HMRC tool helps estimate the VAT that might be owed or reclaimed by your business upon registration. It allows you to explore various ‘what-if’ scenarios, helping you compare different situations and their potential impact.

To use the tool, visit: https://www.gov.uk/guidance/check-what-registering-for-vat-may-mean-for-your-business