Business Link - VAT for new businesses

VAT

Will my business have to register for VAT?
You must register your business for VAT if:

• your turnover is over a particular amount – currently £67,000; or
• you think your turnover may soon go over this limit.

If you are registered for VAT, you will normally need to send a VAT return to HM Revenue & Customs every three months.

How does VAT work?
If you are registered for VAT, you will charge VAT on the goods and services you sell and pay it on the goods and services you buy.

If you are not registered for VAT, you will still pay VAT on the goods and services you buy.

Can I reclaim VAT?
You cannot reclaim VAT if you are not registered for VAT.

If you are registered, you can claim back VAT if you have paid out more VAT than you have charged.

Does VAT apply to all products and services?
No. However, it is charged on most goods and services at a standard or reduced rate.

Can I register for VAT if my turnover is lower than £67,000?
Yes, and in some cases this can be a good idea. Ask your business adviser or accountant for more details, or see below for more information.