When should I charge VAT?

Updated on May 6, 2022

It doesn’t matter if your company is required to register for VAT or not—you should charge VAT at that point.

When the following conditions are met, VAT registration is required:

A taxable turnover in excess of the present threshold of £85,000 (for a 12-month period ending in 2020/21) has been established. Everything that you sell that doesn’t qualify for VAT is included in your VAT taxable turnover.
Taxable turnover in the next 30 days will surpass £85,000 if your business has taxable turnover of more than £85,000 for the last 12 months
For firms selling items in the UK via online marketplaces, there are additional requirements. In our guide on VAT for ecommerce enterprises, we explain this in great depth.

In the event that your firm is required or voluntary to be registered for VAT, you must collect and remit VAT.

When one of the following occurs, one must file for VAT:

A taxable turnover in excess of the present threshold of £85,000 (for a 12-month period ending in 2020/21) has been established. It is the entire worth of all goods and services that you sell that are not exempt from VAT.
During the following thirty days, you estimate your VAT taxable revenue to rise above £85,000.
During the last 12 months, your company’s taxable turnover was at least $85,000
Consider the following advantages and disadvantages before opting to voluntarily register for VAT:

Benefits:

your business is viewed in a positive light
Receipt of VAT

Downsides:

The burden of administration

Because it appears to raise the price of your products or services,
It’s possible that you’ll have to pay an unexpected VAT bill.