VAT (Value Added Tax) is one of those things that often pops up once your business starts to grow, but many business owners aren’t quite sure when it applies or what’s expected of them.
At SA Lee Accountancy Ltd, we’re here to simplify VAT, helping you understand what it is, when you need to register, and how to stay compliant.
What is VAT?
VAT is a tax added to the sale of most goods and services in the UK. If your business is VAT-registered, you charge VAT on your sales and reclaim VAT on eligible business expenses.
The standard VAT rate is 20%, though there are reduced rates of 5% (for certain goods and services) and 0% (for others, like most food and children’s clothes). Whether you apply standard, reduced or zero rate depends on what you sell, but VAT-registered businesses still need to record and report it.
When Do You Need to Register for VAT?
You must register for VAT if your VAT-taxable turnover exceeds £90,000 in any 12-month rolling period (as of 1 April 2024). You can also choose to register voluntarily if you’re under the threshold; sometimes this can make your business look more established or help you reclaim VAT on start-up costs.
It’s important to monitor your turnover carefully as HMRC requires you to register within 30 days of crossing the threshold.
How Often Are VAT Returns Due?
Once registered, you’ll need to submit VAT returns, usually every quarter. This involves reporting:
- The amount of VAT you’ve charged your customers
- The amount of VAT you’ve paid on business purchases
- The difference (which you either pay to HMRC or reclaim)
VAT returns and payments are normally due one month and seven days after the end of each accounting period. Returns are submitted through Making Tax Digital (MTD)-compatible software, so it’s important to keep accurate digital records.
Staying on Top of VAT
VAT can feel complicated—but it doesn’t have to be. At SA Lee Accountancy Ltd, we work with businesses across different sectors to handle their VAT registration, returns, and compliance. Whether you’re approaching the threshold or already registered, we can support you with tailored advice that keeps things stress-free.
Need help with VAT registration or returns?
Get in touch today, we’re always happy to help you make sense of the numbers.