VAT registration estimator

New HMRC tool – VAT registration estimator

10 July 2024| CATEGORIES: HMRC, Online VAT tool, VAT registration| TAGS: , ,

HM Revenue and Customs (HMRC) has launched a digital tool to help businesses estimate what registering for VAT may mean for them.

The VAT Registration Estimator has been developed after feedback from small businesses suggested an online tool would be helpful to show when their turnover could require businesses to register for VAT and its effect on profits.

When must a business register for VAT?

A UK business must register for VAT if:

  • its total VAT taxable turnover for the previous 12 months is more than £90,000; or
  • its turnover is expected to go over the £90,000 VAT threshold in the next 30 days.

A UK business that is not liable to be registered because the value of its taxable supplies is below the VAT registration threshold, can apply for voluntary registration.

An overseas business that makes taxable sales in the UK, or expects to in the next 30 days, must register for UK VAT regardless of its VAT taxable turnover, i.e. from its first UK sale.

There are around 300,000 new VAT registrations each year.

How can the estimator help businesses?

A VAT-registered business must charge VAT on eligible sales and can usually reclaim VAT incurred on eligible purchases.

The estimator enables a business to see what registering for VAT could mean, as well as linking to further information and guidance about the registration process. It is also a useful tool for businesses operating below the threshold and considering voluntary registration.

Jonathan Athow, HMRC Director General for Customer Strategy and Tax Design, said:

We know that the majority of our customers want to get their tax right. We have listened to what businesses have said and the new tool is designed to help them understand VAT registration, including when they might be required to register.

The VAT Registration Estimator has been developed in partnership with small businesses and trade representatives who tested the online tool and gave feedback before its launch.

We hope it will support businesses’ understanding of VAT registration, especially when combined with our guidance and other services.

Kevin Sefton, member of the Administrative Burdens Advisory Board (ABAB), said:

Businesses need to know before they hit key tax thresholds. Tools and guidance can help them prepare. I’m pleased to see this new VAT registration tool from HMRC that helps a business understand the different types of supplies it makes, and what this means for VAT registration.

How to use the VAT Registration Estimator

Information on business sales and costs figures for the goods and services sold in the UK, and the VAT rates that apply to them, need to be obtained in order to use the estimator.

The tool can be used to estimate how much VAT on average might be owed or reclaimed by a business when it registers for VAT. It can be used multiple times to compare different situations that could apply to the business in the future. It is free to use and takes around 20 minutes to complete. HMRC will not record details that are input.

It should be noted that the estimator cannot provide bespoke business advice.  Please get in touch if you require advice on your specific business circumstances and UK VAT registration requirements.

RBCVAT provides practical, hands-on help and advice on all international VAT matters.

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