If your business is growing and you’re nearing the VAT threshold, congratulations — that’s a good sign things are going well. But it also means you’ll soon have to deal with a few more HMRC-related responsibilities. And if you’re not prepared, it can feel like a bit of a minefield.
Use a VAT Calculator
Honestly, this is one of the simplest tools that’ll save you heaps of time. A VAT calculator helps you work out how much VAT to add to your prices — or how much is already included in what you’ve paid. It’s handy when you’re quoting jobs, doing your accounts, or planning cash flow.
So, what exactly is the VAT threshold, and what should you do when you’re close to it? Let’s break it down in plain English.
What Is the VAT Threshold and Why Does It Matter?
In the UK, once your business turnover hits £90,000 (as of April 2024) in a rolling 12-month period, you legally need to register for VAT. Note the phrase “rolling 12 months” — it doesn’t just mean the calendar year or your accounting year. You’ve got to keep checking your total sales month by month.
If you hit that number, you’ve got 30 days to register. Miss the deadline, and you risk late registration penalties — not something you want to deal with when you’re already juggling sales, clients, and invoices.
Getting Ready: What You Should Do Before You Hit the Threshold
If you’re approaching the VAT threshold, now’s the time to get your ducks in a row. Here’s how:
Tidy Up Your Books
Once you’re registered, you’ll need to track the VAT you charge and the VAT you reclaim. If your bookkeeping’s a mess, it’s going to be a nightmare. Use accounting software if you can — many are HMRC-compliant and make it easier to deal with Making Tax Digital (MTD) rules.
Rethink Your Pricing
If your customers aren’t VAT-registered themselves, you’ll need to think carefully about how VAT will affect them. Will you increase your prices by 20%? Or absorb some of it to stay competitive?
Once You’ve Crossed the VAT Threshold
When your turnover tips over that £90,000 mark, you’ve got 30 days from the end of that month to register. Once you’re in the system, you’ll get a VAT number and an official registration date. From that point on, you’ll need to start:
· Charging VAT on your invoices
· Filing VAT returns
· Keeping digital records and using MTD-compliant software
You’ll also need to budget for paying the VAT you collect — don’t spend it all! It’s not your money to keep, tempting as that cash flow boost might be.
Conclusion
Crossing the VAT threshold might feel like one more admin headache, but it’s actually a sign your business is growing. Yes, there’s more to think about, but with a bit of preparation — and a solid VAT calculator in your toolkit — you can manage the change smoothly and even turn it to your advantage.
Stay on top of your numbers, talk to a professional if you need to, and don’t let VAT catch you off guard. Better to be a step ahead than playing catch-up with HMRC.
VAT Record-Keeping Made Simple: Digital Solutions for Online Submissions
For many small businesses, freelancers, and landlords, dealing with VAT can feel like just another layer of admin. But once you’ve registered, keeping the right records is not just a best practice—it’s a legal requirement. Thanks to digital tools and HMRC’s Making Tax Digital (MTD) rules, the way we manage VAT has changed, but in many ways, it’s also gotten a lot simpler.
Whether you’re new to VAT or just want to streamline your current system, this guide walks you through what records you need to keep, how long to keep them for, and which digital solutions can make life a lot easier.
Why Record-Keeping Matters for VAT
When you’re VAT-registered, you’re acting as a collector for HMRC. You charge VAT on your sales (output tax), reclaim VAT on business purchases (input tax), and submit a return that shows the difference. That return has to be backed up by accurate records.
Poor record-keeping can lead to:
· Errors on VAT returns
· Missed reclaim opportunities
· Fines and penalties during an inspection
So, whether you’re handling this yourself or using an accountant, understanding the basics is key.
What Records Do You Need to Keep?
HMRC expects VAT-registered businesses to maintain:
· Sales invoices (including VAT charged)
· Purchase invoices and receipts (for VAT claimed back)
· VAT account (a summary of input and output VAT)
· Any adjustments (e.g. credit notes, discounts, or corrections)
· VAT returns submitted
You’ll also need to keep digital records of your business name, address, VAT number, and any VAT accounting schemes used (e.g. Flat Rate Scheme or Annual Accounting).
All records must be kept for at least six years. If you’re using MTD-compatible software, it will typically store these for you automatically in the cloud.
Digital Record-Keeping: What Does HMRC Require?
Under Making Tax Digital, most VAT-registered businesses must now keep digital records and file returns using compatible software. That doesn’t mean uploading photos of receipts or manually filling out spreadsheets anymore.
HMRC wants to see:
· Digital links between your records and the return
· No manual re-entry of data (e.g. copying from one system to another)
· Use of compatible software to calculate and submit VAT
Even if you’re using spreadsheets, you’ll need bridging software to create a compliant digital journey from your transactions to your VAT return.
Filing Your VAT Return Online
Once your records are sorted, filing your return is the final step. If you’re registered under MTD, you must use your accounting software to submit the return—spreadsheets alone won’t cut it.
Here’s what to check before you file:
· All relevant sales and purchases are recorded for the period
· VAT is calculated accurately
· Any adjustments (e.g. partial exemptions or reverse charges) are correctly applied
· You’ve reviewed the return before submission
To get started, you’ll need to register for VAT return online through HMRC’s Government Gateway. Once done, you can link your software and submit your first digital return.
Conclusion
VAT doesn’t have to be a burden. With the right tools and a bit of organisation, digital record-keeping can help you stay compliant, save time, and even spot opportunities to improve cash flow.
If you’re not sure which software to use or how to get started with MTD, speak to a qualified accountant—they’ll help you set things up right the first time.
In today’s digital world, learning how to register for VAT return online and maintain proper records isn’t just a legal box to tick—it’s part of running a modern, efficient business.
