Understanding whether to register your small business for VAT can be confusing. You might need to consider your current revenue, how much you plan to grow, and your customer base. Recent research has shown that 26,000 businesses are delaying their growth plans to avoid hitting the VAT threshold, with concern about increased costs and admin workload. Although you have to register for VAT if your turnover is £90,000 or more, there are options to register voluntarily.
A new digital tool from HMRC has launched to help small businesses check the likely implications of VAT registration. It also offers the opportunity to experiment with different inputs and outputs, so you can see how VAT could affect you as your business grows.
The VAT Registration Estimator offers a quick and easy way to check online what registering for VAT could mean. Whether your business is new, or more established, the tool allows you to enter details and find out whether your turnover means you should register for VAT (and the effect VAT could have profits). Here’s how it works:
- Step 1 – set aside around 20 minutes to use the tool
- Step 2 – gather the details of your business income and costs (and the VAT rates that apply to them)
- Step 3 – work through the tool noting your approximate business income and business costs for up to 12 months
- Step 4 – choose the VAT rates for business income and costs and if you’d prefer to add VAT to, or absorb VAT into, your current/estimated selling price
- Step 5 – check and print your results
No details are recorded, so you can use the tool without fear that it will trigger more action from HMRC.
There’s also information about the VAT registration process – whether your turnover means its mandatory or whether you are considering voluntary registration.
A live webinar explaining how to use the tool will be held on 24 July 2024. To discuss any queries about whether to register for VAT please get in touch.