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Being VAT registered means that you can add VAT to your sales and can reclaim a VAT on your purchases – even if you do not sell anything during a VAT accounting period. The VAT registration threshold is £67k for a twelve month period. VAT registration is compulsory if you exceed this threshold.

Alternatively there is scope to register with Her Majesty’s Revenue & Customs (HMRC) on a voluntary basis even if your sales are below the threshold. Voluntary registration will largely depend on whom you are trading and whether or not you are trading in another EC country.

What are the different VAT rates

  • 17.5% is the standard rate of VAT. This rate is applied to the majority of goods and services.
  • 5% is the rate of VAT applied to fuel and power used within the home and by charities. In addition a child’s car seat and any other goods and services which are deemed to be either essential or beneficial to the public good are charged at 5%.
  • 0% of is the final rate which is applied to food, medicines, books, newspapers, children’s clothes, public transport services and other goods and services which are perceived as essential or beneficial to the public good.

How to register

There is no charge for registering and the process is fairly straight forward -HMRC will provide you with a VAT1 registration form. If you are registering on a voluntary basis you may be asked for paid invoices or additional proof to show intent to trade.