In the UK, you must register for VAT if your taxable turnover exceeds £90,000 in a rolling 12-month period, or if you expect it to exceed this amount in the next 30 days. This threshold, effective from April 2024, requires businesses to monitor their turnover monthly.
Like most business people, you probably know that there is a turnover threshold for VAT. Currently, that level is £90,000 and if your VAT taxable turnover goes over this level, you must register for VAT.
Products that shouldn't be taxed are considered to be exempt from VAT. Businesses, charities, and other types of organisations can also be considered to be exempt from VAT. A business is VAT-exempt if they only sell VAT-exempt products, or if they're not involved with taxable 'business activities'.
In many countries, VAT registration is mandatory once a business exceeds a certain threshold of taxable turnover, even if they have no physical presence therein. This threshold varies by jurisdiction, so companies must be aware of the requirements specific to the countries where they operate.
VAT on imported goods and services are paid by the importer. Any person supplying or who expects to supply taxable goods and taxable services with a value of Kshs 5 Million or more in a year is required to register for VAT.
Criteria for VAT Qualifying Goods
The main criterion for goods or services to be VAT qualifying is their use in a business context. Items purchased for exclusive use in a business, which can include commercial vehicles, business equipment, and other capital goods, qualify for VAT reclaim.
According to the Finance Act of 2008, businesses that issue an invoice showing VAT when they are not registered are liable to pay a penalty up to 100% of the amount shown on the invoice. Even an error could lead to penalties, so you should take care to leave VAT off your invoices entirely if you're not registered.
To get the product VAT free your disability has to qualify. For VAT purposes, you're disabled or have a long-term illness if: you have a physical or mental impairment that affects your ability to carry out everyday activities, for example blindness. you have a condition that's treated as chronic sickness, like diabetes.
VAT is calculated based on your taxable turnover, not your profit. That means it applies to the total value of your VATable sales, regardless of your expenses or how much profit you actually make. Profit is relevant for income or Corporation Tax, but VAT is purely based on the value of goods or services sold.
Any dealer conducting a business or intending to conduct a business may apply to be registered for VAT. However all persons conducting a business must register for VAT from the date they commence business if they believe their taxable turnover will exceed a threshold of Rs. 40 lakhs in 12 consecutive calendar months.
What Is Business Splitting? Splitting a business involves dividing one business into multiple entities to keep each entity's turnover below the VAT registration threshold. Business owners sometimes do this to avoid having to apply VAT and keep individual splits below the registration threshold.
A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000. They may also opt for voluntary registration if their taxable supplies and imports are below the mandatory threshold but exceed the voluntary registration threshold of AED 187,500.
Annual Sales
Another way to determine if an entity should be VAT or NON-VAT is the Annual Gross Sales or Receipts. As such, if the taxpayer exceeds the gross annual sales or receipt threshold, they will automatically be classified as VAT registered.
The penalties for failing to register for VAT on time depend on the degree of lateness in registering: Not more than 9 months late: The penalty is 5% of the due VAT. More than 9 months but not more than 18 months late: The penalty is 10% of the due VAT. More than 18 months late: The penalty is 15% of the due VAT.
Healthcare: Medical services, hospital care, and the supply of certain medical products may also be exempt from VAT. Financial services: Many financial services, like insurance and banking, are VAT-exempt. Charitable activities: Donations and activities carried out by registered charities may be exempt from VAT.
As the law mandates, any person or entity who, in the course of his trade or business, performs or intends to perform taxable activities subject to VAT, if the aggregate amount of actual gross sales or receipts exceeds PHP 3,000,000 in a 12-month period, must be VAT-registered.
You must register your business for Value Added Tax (VAT) if the total value of taxable goods or services is more than R1 million in a 12-month period, or is expected to exceed this amount. A business may also register voluntarily if the income earned in the past 12-month period exceeded R50 000.
VAT (Value Added Tax) is a tax added to most products and services sold by VAT -registered businesses. Businesses have to register for VAT if their VAT taxable turnover is more than £90,000. They can also choose to register if their turnover is less than £90,000. This guide is also available in Welsh (Cymraeg).
You must start charging VAT at the appropriate rate on taxable sales once you are a VAT registered trader. This can be as a consequence of either compulsory or voluntary registration.
Shipping your purchases home directly from the retailer is another way to avoid paying VAT, but the added cost may outweigh any savings. You can try to get your VAT refund through the mail but the process takes much longer and can be unreliable. Most people submit their requests at the airport on their way home.
Invoices and VAT numbers if you're not registered for VAT
VAT numbers are only given to businesses that have actually registered for VAT, so if your business isn't VAT registered, it's perfectly fine to send invoices that don't include a VAT number.
It gives your business credibility: Registering for VAT can make your business appear more legitimate and trustworthy to clients and investors, creating a positive image for your business. It may be better for business: Similarly, some businesses only work with other businesses that are VAT-registered.
The VAT threshold for 2025-26 is £90,000. The government announced this increase in last year's Spring Budget, with the new threshold coming in from 1 April 2024. The VAT registration threshold is set by HMRC every year – but it remained unchanged from 2017-18 until increasing from £85,000 in 2024-25.
You need to register for VAT if you go over the registration threshold (or expect to). There are also thresholds for using some VAT accounting schemes. Use your taxable turnover to work out if you're over a threshold. This is the total value of everything you sell or supply that is not exempt.
When you register with BIR, you can choose between being VAT-registered or non-VAT-registered. This choice will determine how your taxes are calculated. VAT-registered: You pay 12% VAT on the difference between your output tax (sales) and input tax (expenses). Non-VAT registered: You pay a 3% tax on your gross sales.