HMRC's New VAT Registration Estimator Tool

HM Revenue and Customs (HMRC) has launched a digital tool designed to help businesses estimate the implications of registering for VAT.

The VAT Registration Estimator was developed in response to feedback from small businesses, which indicated that an online tool would be beneficial in determining when their turnover might require VAT registration and how it could affect their profits.

VAT Registration Requirements

A business must register for VAT if:

Their total VAT taxable turnover for the previous 12 months exceeds £90,000 (known as the ‘VAT threshold’). Note that this threshold was £85,000 until 31 March 2024.
They expect their turnover to exceed 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 within the next 30 days), regardless of their VAT taxable turnover.

Once registered, a business must charge VAT on eligible sales and can usually reclaim VAT on eligible purchases. There are approximately 300,000 new VAT registrations each year.

Benefits of the VAT Registration Estimator

The estimator can help any business understand what registering for VAT could entail and provides links to further information about the registration process. It is also a valuable tool for businesses operating below the threshold and for those considering voluntary registration.