Key Point: In April, the VAT threshold will increase by £5,000 to £90,000, as announced by Chancellor Jeremry Hunt in the Spring Budget on March 6, 2024.
Learn the ins and outs of managing your business near the £85,000 VAT threshold. This article provides insights, timely reminders, and actionable steps for a seamless transition.
Are you a small business owner approaching the £85,000 annual turnover mark? This article, inspired by a client’s experience, is a friendly reminder of the significance of managing the VAT threshold.
The VAT registration threshold for sole traders is £85,000.
- It is a legal obligation to register for VAT if your annual turnover surpasses this limit.
- Register within 30 days if you anticipate exceeding or surpassing the threshold.
When Should You Register for VAT?
- If your turnover is expected to exceed £85,000, register within 30 days.
- If your business had a turnover of over £85,000 in the last 12 months, notify HMRC within 30 days.
Additional Considerations:
- Registering Ahead of Time: Anticipating growth? Registering in advance can prevent delays.
- Cost Savings: VAT-registered businesses can reclaim VAT on purchases, potentially boosting profits.
- Forecasting Growth: Prudent for businesses expecting growth, avoiding delays, and saving on supply costs.
Temporary Exceeding of Threshold: Request an exception with evidence if your business temporarily exceeds the VAT threshold.
VAT Accounting Schemes: Explore schemes like flat rate, cash accounting, and annual accounting for tailored benefits.
VAT Deregistration: No compulsory threshold for deregistration. Request cancellation if VAT-taxable turnover falls below £83,000.
Act Promptly: Notify HMRC within 30 days to avoid fines. Retain VAT records for six years, even after cancellation.
For personalised assistance or questions about your situation, reach out to us, we’re here to help you navigate VAT regulations.
For more information about this topic, head over to the Government website linked below:
