Should You Register If You Exceed the UK's VAT Threshold?
We recognize that issues relating to taxes might be a little scary. But it is not necessarily the case. Understanding key terms and procedures, such as the VAT threshold, can make it easier for prospective business owners looking to launch a venture in the UK to navigate the area's tax system.
This article will discuss the Value-Added Tax (VAT) in the UK and when your company is needed by law to register for it. Along with that, we'll discuss the benefits of filing for VAT and any difficulties it can present for your company.
How to calculate the UK's VAT threshold
The VAT threshold is the amount of revenue a company can generate before having to register for VAT. A company must register for VAT if its taxable revenue exceeds £85,000 over any successive 12-month period, according to the most recent threshold in the UK.
You still have the choice to voluntarily register for VAT even if your company's yearly revenue is below the threshold.
Remember that, as of December 1, 2012, non-established taxable persons (NETPs) are no longer eligible for the standard UK registration threshold. In the UK, NETPs must register for VAT if they wish to make taxable supplies.
What percentage has the UK's VAT threshold changed?
Understanding how the UK's VAT threshold is adjusted each year will assist your company choose whether to start making preparations for VAT registration. The VAT threshold has steadily increased for UK enterprises over the past ten years; in particular, the gateway amount rose from £77,000 in 2012 to £85,000 in 2022. The most recent change to this sum was in 2017, and further changes are anticipated.
Over the previous ten years, the UK government has announced the following annual modifications to the VAT threshold:
2012-2013: £77,000
2013-2014: £79,000
2014-2015: £81,000
2015-2016: £82,000
2016-2017: £83,000
2017-2018: £85,000
2018-2019: £85,000
2019-2020: £85,000
Advantages and disadvantages of voluntarily registering for VAT
If their enterprises have not yet reached or beyond the minimum amount required by the government, as we have noted at the beginning of the article, they can choose to be VAT-registered in the UK. This choice undoubtedly has advantages and disadvantages of its own.
Possibilities for VAT registration
Some of the following elements might influence your decision to lean towards voluntary VAT registration:
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