HMRC VAT Registration Estimator Launched

HM Revenue and Customs (HMRC) has introduced an innovative digital VAT tool aimed at assisting businesses with their UK VAT registration obligations. In response to feedback from small businesses, the new VAT Registration Estimator has been launched to provide an online tool for determining when their turnover might require UK VAT registration and how it could affect their profits.

Understanding UK VAT registration

A business is required to register for UK VAT if:

• Their total VAT taxable turnover for the past 12 months exceeds £90,000. Prior to March 31, 2024, this threshold was £85,000.
• They anticipate their turnover will surpass the £90,000 VAT threshold within the next 30 days.
• They are a foreign business not based in the UK but supply goods or services to the UK (or plan to within the next 30 days), regardless of their VAT-taxable turnover.

Upon registration, a business must charge VAT on eligible sales and is typically allowed to reclaim it on eligible purchases. 

What is the VAT Registration Estimator?

The VAT Registration Estimator is designed to aid any business in understanding the potential consequences of VAT registration. It also connects users to further information regarding the registration process. Moreover, it serves as a valuable resource for businesses operating below the threshold but considering voluntary registration.

The Estimator was developed with input from small businesses and trade representatives who tested and provided feedback on the tool before its launch. The goal is to enhance businesses' understanding of VAT registration through combined guidance and services.

How to use the VAT Registration Estimator

To use the VAT Registration Estimator, you will need information about your business income and costs, and the applicable VAT rates. Follow these steps:

1. Gather details on your business income and costs and the VAT rates applicable to them.
2. Enter whether the business is, or will be, based in the UK, along with your approximate business income and costs for up to 12 months. This is also applicable for new business setups.
3. Select the VAT rate(s) for your business income and costs, estimated as a percentage of standard-rated, zero, reduced, or VAT-exempt goods and services.
4. Specify whether you prefer to add VAT to your current or estimated selling price, or to include it within the price.
5. Check your answers, complete the form to review the results, and save or print them.

The Estimator is accessible at any time, free of charge, and typically takes around 20 minutes to complete on first use. Importantly, HMRC will not record the details inputted by users.

The VAT Registration Estimator is a guidance tool designed to help businesses determine if UK VAT registration is suitable for them. It allows for experimentation with various inputs and outputs but does not provide personalized business advice.

Do you need VAT help? Book a free call with one of our VAT experts to find bespoke solutions for your business, optimize your VAT costs, and reach millions of new potential customers.