For practically anyone running a business in the United Kingdom, it can be worth doing a little research on VAT – especially if your company needs to be registered. Want to learn more about how to register for VAT and why it can be a necessity for some business owners in the UK? From the steps of the VAT registration process to how it works, we’re here to give you a helping hand in figuring it all out.
What is VAT?
Put in simpler terms, Value Added Tax (VAT) is placed on essentially any goods and services in the UK. The tax is paid by consumers when they purchase a product and is based on the value of the item or service they’re buying. The difference between the VAT paid by customers and the amount you’ve paid for business-related expenses is then calculated to determine the amount of tax you owe the HMRC.
How does VAT work?
Luckily for those who need to charge VAT, it doesn’t need to be too complex. Most people pay VAT on a daily basis without any added stress, and businesses can take care of their tax needs without too much hassle either.
Due to the fact that VAT is a form of tax that’s based on percentages, the rate will vary depending on what a consumer buys. From the value of the item itself to the amount they purchase, all of these things can make a difference to the total amount of VAT placed on that particular purchase.
While a large percentage of businesses in the UK will either need or have the option to charge VAT, there are a few items that are exempt from this form of tax, which may be a good idea to look into.
It’s worth noting that you’ll need to keep track of your VAT and ensure that everything is done correctly. This includes having the correct VAT value within the price of your goods and services, keeping a record of the Value Added Tax you pay on your business expenses, and of course, making sure that you give the HMRC what you owe by the end of the tax year.
While this isn’t all there is to it, these are just a few examples of the things you’ll need to keep in mind when charging VAT.
What is the VAT threshold in the UK?
For those who don’t know, the VAT threshold is essentially the amount that you’re allowed to earn before needing to apply for Value Added Tax. VAT is a necessary tax for essentially any UK business with a taxable turnover higher than £85,000. For those that have a turnover less than this, VAT registration isn’t a requirement, but it is still an option. There are many companies that choose to charge Value Added Tax, purely for the fact that there are a few benefits that can come with it, like VAT refunds or improving your brand image.
How do I register for VAT?
For anybody who’s looking to get started, it can be a good idea to learn about the VAT registration process. Even if you’re not at the threshold, it doesn’t hurt to be prepared for what you may need to do in the future. With all that in mind, we want to give you a helping hand to understand some of the different things that are usually involved.
Here’s a quick step-by-step run-through of the process most business owners go through when registering for VAT:
- Decide whether you want to sign up online or with the VAT1 form – In general, there are going to be 2 options for you to choose from when it comes to your application; doing it all online, or using the standard VAT1 form. While everybody will have their preferences, many people choose to register for VAT online.
- Make sure you have everything you need – As you may expect, there are a few things that will be necessary for VAT registration. Things like bank account details, tax reference numbers, and the contact details of your business are a few of the most important things to provide when applying for VAT.
- Have a clear understanding of your business – You’ll usually need to provide information about your company too. In most cases, this will include things like the nature of your business and your general turnover, so make sure you’re prepared to provide an overview of your firm.
- Find the right type of VAT for you – With several different forms of Value Added Tax to choose from, it’s always worth taking the time to find the right one for your unique needs. The most notable ones are Annual Accounting, Cash Accounting and Flat Rate schemes.
How long does it take to register for VAT?
While there is often an array of different factors that can come into play when determining the length of the process, it usually won’t take too long at all. For most business owners, registering for VAT will take between 10 and 14 working days. Some individuals may find that the process will take a little longer, but the majority will have their VAT registration complete within this timeframe. Even when applying online, the process will usually be finished in 14 days at the latest. 70% of businesses applying for VAT will have everything done in the space of 10 working days.
HMRC states that you should receive your certificate within approximately one month from the date of your submission. This certificate contains your VAT number, so you may need to wait a little while longer for everything to be in order. Even so, the majority of applicants won’t need to worry too much about having to wait for everything to go through, as a month isn’t too long in the grand scheme of things. With this in mind, there really isn’t generally that much to stress about.
Contact Workhy to register for VAT in the UK
Many of those who are looking to establish a company in the United Kingdom will find Workhy to be an excellent choice to assist them. If you want a team that will help you in a variety of different areas, including VAT registration, there’s no doubt that you’ll find our services to be worthwhile. With all that in mind, feel free to contact us if you want to learn more.