Thinking of Registering for VAT? Try HMRC’s New VAT Estimator Tool
Are you considering registering for VAT but unsure if it will benefit your business? HMRC’s new VAT estimator tool could provide the clarity you need.
Who the VAT Estimator Tool is For
This tool is designed for businesses that are either under the VAT threshold or nearing it. Remember, your business must register for VAT if its total VAT taxable turnover over the last twelve months is £90,000 or more. Registration is also compulsory if you expect your turnover to exceed £90,000 in the next 30 days. Additionally, if you and your business are based outside the UK but supply goods or services to the UK, you will need to register for VAT.
What the VAT Estimator Tool Does
The VAT estimator tool helps you understand the implications of registering for VAT on your business. It allows you to estimate:
- The VAT that might be owed by your business after registration.
- The VAT that might be reclaimed after registration.
The tool also enables you to compare different scenarios that might apply to your business. If your business is below the VAT threshold, the tool can still be very beneficial. In some cases, registering for VAT might result in the taxman paying you if you pay out more VAT than you charge.
Additionally, the tool can be useful if you are considering deregistering for VAT. However, keep in mind that the deregistration threshold is currently £88,000, slightly lower than the registration threshold of £90,000.
Before making any decisions, get in touch with us today. We can provide tailored advice and manage your VAT returns, ensuring your business is compliant and optimised for VAT.
How to Use the VAT Estimator Tool
The VAT estimator tool is free to use. Before using it, you will need to gather some information, including:
- Your approximate income and costs for your chosen time period (up to 12 months).
- The VAT rate(s) applicable to your income or costs. You can find information on the different VAT rates for goods and services here.
- Whether you plan to add VAT to your current prices or absorb it within your current prices.
Next Steps After Using the VAT Estimator Tool
If the tool indicates that you should be registering for VAT, it’s a good idea to consult one of our accountants. While the tool is helpful, it cannot replace the expertise and knowledge we have about the VAT system. Various VAT schemes, such as VAT cash accounting, VAT annual accounting, and VAT flat rate schemes, may offer different benefits or drawbacks for your business. We can help you determine the best fit and advise you on whether deregistering for VAT would be beneficial.
Before making any decisions, get in touch with us today. We can provide tailored advice and manage your VAT returns, ensuring your business is compliant and optimised for VAT.