Self Employment and Registering for VAT

If you’re self employed then you may have to register your business for Value Added Tax (VAT).

Our guide looks at who should register for VAT and when you may benefit from registering voluntarily.

Registering for VAT

You can register for VAT if you are self employed and are an individual, a company, a club or association, a partnership or a charity.

However, you can’t register for VAT if you aren’t in ‘business’ (according to HMRC’s definition) or you only sell goods and services exempt from VAT.

HMRC defines a business as a ‘continuing activity involving getting paid for providing goods or services – in money or another form of payment such as in-kind or barter.’

Businesses would therefore include:

• Self employed trades and professions
• Entities that charge admission to a premises
• Clubs and associations that provide membership benefits in return for payment

Thresholds for VAT registration

If you supply goods or services within the UK and your turnover of VAT taxable goods and services that you supplied in the UK for the previous 12 months is over £73,000 (the current registration level) you must register for VAT.

If you expect your turnover to exceed that figure in the next 30 days alone you must also register.

If you take over a VAT-registered business from someone else, you have to add your own VAT taxable turnover over the last 12 months (if any) to that of the business you’re taking over. If the total on the day of the takeover exceeds £73,000 (the current registration level) then you will have to register for VAT.

Voluntary VAT registration

Even if your turnover is less than the VAT threshold, you can voluntarily register for VAT. Advantages of voluntarily registering for VAT include:

• You can charge VAT on your sales and claim back VAT on your purchases (for example if you sell zero VAT rated items and buy standard VAT rated items you will get a tax refund)
• You can claim VAT back on your purchases even if you don’t sell anything during a VAT accounting period

If you decide to voluntarily register for VAT, you must keep all VAT records and issue VAT invoices. You will also have to complete and submit a VAT Return at regular intervals, and make payments as and when they are due.

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