HMRC launches VAT Registration Estimator tool

HMRC has unveiled a new digital tool to help businesses estimate what registering for VAT may mean for them.

Named the VAT Registration Estimator, it has been introduced after feedback from small businesses suggested an online resource would be helpful to show when their turnover could require them to register for VAT and its impact on profits.

Who should register for VAT?

A business must register for VAT if:

• their total VAT taxable turnover for the previous 12 months is more than £90,000 – this is known as the ‘VAT threshold’; the figure was £85,000 until 31 March 2024
• they expect their turnover to go over the £90,000 VAT threshold in the next 30 days
• they are an overseas business not based in the UK and supply goods or services to the UK (or expect to in the next 30 days) – regardless of VAT-taxable turnover

A VAT-registered business must charge VAT on eligible sales and can usually reclaim it on eligible purchases.

HMRC said the estimator can help any business to see what registering for VAT could mean, as well as linking to further information about the registration process. It is also a useful tool for businesses operating below the threshold and considering voluntary registration.

How to use the VAT Registration Estimator

The estimator is free to use and should take around 20 minutes to complete on first use. Businesses will need to input approximate business incomes and costs, use the guidance to choose an appropriate VAT rate and choose to add VAT or absorb it into a current or estimated selling price. HMRC will not record the details that are input.

Access to the tool and more information can be found on the gov.uk website.

For advice and guidance on VAT issues please get in touch with our experienced, specialist team today.