HMRC VAT – If you’re in business, or thinking about starting a business you need to know about VAT. In this article we look at:


  • What is VAT?
  • Do I have to charge VAT?
  • What you have to do if you register for VAT
  • How we can help

What is VAT


VAT is a tax you have to charge when you sell goods or services.


There are three possible VAT rates:


% of VAT What the rate applies to
Standard rate 20% Most goods and services
Reduced rate 5% Some goods and services
Zero rate 0% Zero-rated goods and services



Do I have to charge VAT?


For some businesses, deciding whether to be VAT registered will be a choice, and for others it’s a requirement. You must register for VAT if sales of taxable goods and services services supplied in the previous 12 months is more that £85,000, or you expect to exceed £85,000 in the next 30 days alone.


Important dates:


  • If you breach the VAT threshold of £85,000 based on the historical test you must notify HMRC within 30 days from the end of the month in which the limit is breached. You charge VAT on supplies from the first day of the following month.


  • If you breach the VAT threshold based on the future test you must notify HMRC within 30 days of the day you believe the supplies in the next 30 days alone will exceed £83,000. VAT registration is immediate and you must charge VAT straight away.


If you register late you will still have to pay VAT from the time you should have registered, and a penalty may be charged



Whilst every effort is made to keep the information up-to-date on these pages, we cannot guarantee it is. Nothing on these pages should be construed as legal, financial or tax advice. Always discuss your situation with an accountant so they can tailor the advice to you and your business. Newton Accountants accept no liability for for any reliance you place on informaiton taken from this website.