I discovered quite a few points in this article, backdating of VAT claims, Thresholds, profile of my company if it is VAT registered, can't raise VAT invoices until registration is complete. Very useful in helping me decide.
I always wondered why you could "voluntarily" register for VAT even if you didn't have to. Couldn't understand why you would bother otherwise. Suddenly makes a lot of sense! Thanks for this video. Given you a subscribe! Cheers!
Hi Indy, thanks for leaving a comment. We're so glad our video was able to give you some clarity on this. Is there anything else you find confusing? We're always looking for more video inspiration!
Rewatching for a second time, I had no idea non-vat registered companies could have issues dealing with larger companies if they have specific policies in place about this! Fantastic!
Glad you found it useful, Sam! As long as you can provide sufficient evidence to HMRC, it is certainly possible! Have you found VAT registration beneficial for your company?
Thanks for the excellent explanation on this! VAT Registration has always been a questionable one for me and this has really clarified whether I need to be registered for this or not. This is certainly something that I am going to consider.
Great video! VAT has always been a grey area for me but this has cleared the misconceptions I have had previously. P.S. I can't wait for next weeks video, these save me having to visit the midfield that is HMRC.
We're happy you've found this video insightful, John! Certainly, it's something to keep in mind when deciding whether to register your company for voluntary VAT registration. What would you like to see in our next Whiteboard Thursday series?
Great video - It would be great if you could do an additional video which explains the additional forms of registration - flat rate & cash accounting schemes
Great to hear you found the whiteboard useful! I would recommend taking a look at our blog post on the pros and cons of VAT registration here - www.1stformationsblog.co.uk/vat-registration-the-pros-and-cons/. Did you learn something new from our video?
Thanks for watching and for your suggestion. We will pass this onto Nicholas and the team! Is there anything specifically you would like to see covered in a Non-Resident focused video?
We have formed a limited company with 1st formation and we are non resident directors. We plan to sell services like digital marketing, design, website development and app development services. Should we consider registering for VAT? Our customers are from global market. Should we only pay the VAT for the customers we serve in UK?
Apologies for the delay in our response. Becoming VAT registered can provide a significant range of benefits to businesses of all sizes; however, there is a good deal of administration involved. A business is legally required to register for VAT when taxable turnover (i.e. overall takings, not profit) for the previous 12 months exceeds the VAT registration threshold of £85,000 (2023/24 tax year), or if it is expected to exceed the VAT threshold in the next 30 days. Unfortunately, we cannot assist with tax and would suggest seeking the advice of an accountant to assist you.
It's possible to cancel your VAT registration online and usually takes 3 weeks for HMRC to confirm your cancellation and the official cancellation date. Hope this is useful to you! What would you like to see in our next video?
Does VAT apply only when I sell to UK citizens? Or should I charge VAT for anyone because my business address is in UK? PS : Have a UK Registered LTD and sell online targeting many countries
Thanks for your question Mehdi! If you are exporting 'goods' outside of the UK, you do not need to charge VAT on these items. By exporting goods, we mean sending physical items outside of the UK. However, if the delivery address of the items is based in the UK, you must charge VAT on them. If you are not selling physical goods, you should refer to this list as to whether you are required to charge VAT to non-UK customers: www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers. Does this help you?
in order to claim a reclaim for up to 4 years ago, where it says "From what date do you want the business to be registered?" do I need to backdate up to the 4 years or is it that I can reclaim up to 4 years regardless of the date of registration? Also, if you are a small business considering voluntary registration and you are looking to reclaim VAT, does it make sense to voluntarily register if there isn't much to reclaim (if the reclaim option is a key driver in registration), if so what amount would you say is just not worth it? Thanks!!
Hi Amie. You can only reclaim up to 4 years if the business was registered at least 4 years ago. We always recommend trading companies to register for VAT, because business partners, suppliers, customers etc will see your invoices without VAT and know that your company is a micro-company. As a result, they may be less likely to do business with you. In addition, some larger organisations have policies prohibiting them from entering into contractual arrangements with companies which are not VAT registered. Have you checked out our VAT Registration Service, which can be found here: www.1stformations.co.uk/vat-registration/
Hello I have got some questions I know who in UK Is possible to use a Company whitout a VAT now my question is 1 can I have an online account without VAT 2 Can I have a VAT if I am not resident 3 If I register for VAT I have expenses even if I don't invoice,and I don't make profit I have a film production and distribution company, not a shop,
Thank you for comment, Giuseppe. 1. Yes, you can have an online account with HMRC without being registered for VAT. 2. Yes, you don’t have to live in the UK for your company to be VAT registered. 3. Unfortunately, we can only register companies for VAT and are unable to give specific tax advice. We would recommend speaking to an accountant about this question.
@@giuseppebonelli Sorry Giuseppe! Yes, you can also have an online bank account without being registered for VAT. Companies are only required to register for VAT if your annual turnover exceeds £90,000.
Thank you for your question, Jake! Let’s say you run a pottery business. You purchase £100 worth of clay from your supplier. For this, there is £20 worth of VAT to pay (so the total you pay the supplier is £120). You then process the clay into your finest pot and then sell it to a customer for £190 plus VAT (VAT being in this case £38, making a total sake price of £228). The company, being registered for VAT can claim back the original VAT amount of £20. Even after you substract this £20 from the total VAT you charged your own customer, you would still have a VAT bill to pay of £18. We hope this helps! :)
so if my turnover is less than 85k and i register for vat voluntarily. Do i have to charge a output vat tax to customer? if i buy a 10 pound product and am able to claim 2 quid input vat, when i sell for 20 do i have to charge output vat? or is it assumed i have vat added into the sale price? because if have to charge vat then it would be 4 quid VAT minus 2 quid VAT reclaimed? so what's the point.
Thanks for the question! Once a company is registered for VAT, it must charge VAT on its products and services. In general terms, using the example you have provided, the VAT would not be assumed to have been added when you sell a product for £20, so you would normally expect the additional VAT amount of £4 to be added (based on the current 20% VAT tax rate). In this way, it is ultimately the end consumer that pays the full amount of VAT. We hope that helps!
@@1stformations Thanks so the video. Just to clarify, if I don't register for VAT, does that mean I do not have to set aside 20 percent from my sales profit for VAT as I am not charging the customer?
@@khalidfazil8545 That is correct Khalid. It should be noted that if you did register for VAT you would not be setting 20% of sales profit, the VAT would need to be added to each sale on top and then set aside for the government, which is slightly different. Is your turnover going to be or is over £85,000 per year?
Hi, is there an obligation to register for VAT if turnover of 85K is generated from overseas sales ( USA). In other words, do overseas sales count towards VAT registration threshold (£85,000)?
Thanks for your question Piotr. If the place of sale is outside of the UK, any income derived from the same will not count towards the VAT threshold. Have you thought of registering for VAT anyway, for prestige reasons and to claim back VAT paid?
@@marynarkw In that scenario, the point of sale would be the UK, and therefore if applicable based on what you were selling, this revenue would count towards your VAT registration threshold. What type of things will you be selling?
I discovered quite a few points in this article, backdating of VAT claims, Thresholds, profile of my company if it is VAT registered, can't raise VAT invoices until registration is complete. Very useful in helping me decide.
Glad we were able to offer some further insight on the topic! What other content would you like us to cover on our channel?
I always wondered why you could "voluntarily" register for VAT even if you didn't have to. Couldn't understand why you would bother otherwise. Suddenly makes a lot of sense! Thanks for this video. Given you a subscribe! Cheers!
Hi Indy, thanks for leaving a comment. We're so glad our video was able to give you some clarity on this. Is there anything else you find confusing? We're always looking for more video inspiration!
Rewatching for a second time, I had no idea non-vat registered companies could have issues dealing with larger companies if they have specific policies in place about this! Fantastic!
Thanks Angus! We are pleased that you learned something. What would you like to see Nicholas and the team cover next?
I didn't know VAT could be claimed 4 years backdated. Thanks!
Glad you found it useful, Sam! As long as you can provide sufficient evidence to HMRC, it is certainly possible! Have you found VAT registration beneficial for your company?
Brilliant video, concise, simple, and clear. Thank you!
Thank you Lisa. Do you have your own limited company?
Thank you 1st Formations for always providing me with the knowledge I need to make the best decisions for my company!
Thanks Keziah! We are pleased you liked the video. What did you learn?
More information that I’m sure will be useful to many small businesses out there! Keep the videos coming guys!
More to come!
Thanks for the excellent explanation on this! VAT Registration has always been a questionable one for me and this has really clarified whether I need to be registered for this or not. This is certainly something that I am going to consider.
Thanks Polina! We are glad to have helped. What would you like to see us cover next?
A great video as always from the 1st Formations team! Highly informative. Thank you.
Thanks Tayah! We are pleased you liked the video. What did you learn?
Very useful video. Thanks for the information!
Thank you Zafirah. We are pleased you liked the video, what would you like to see next?
Very informative and useful - Thank you Nick.
Glad it was helpful!
Thank you for the instructions!
You're welcome!
Thanks for the info, i hadn't realised that registering for VAT was voluntary for some companies
We are pleased you learned something about VAT! What would you like Nicholas and the team to cover next?
Great content, very informative allows you to weigh up the pros and cons and decide what's best for your business.
Thank you Margaret! We are pleased you like the video. What would you like to see Nicholas and the team cover next?
Great video! VAT has always been a grey area for me but this has cleared the misconceptions I have had previously. P.S. I can't wait for next weeks video, these save me having to visit the midfield that is HMRC.
Thanks Rob! We hope that you enjoy all of our videos. Any suggestions for a future video?
appreciate the explanation, convinced I need to register
You are very welcome, Dirame! It can certainly be advantageous to register your company for VAT. What benefit did you like the most?
Great video! thanks!
Thank you for your comment Youness! What other content would you like us to cover on our channel?
Didn't realise that some larger companies will not deal with an non-VAT registered business due to their policies - thanks for the info!
We're happy you've found this video insightful, John! Certainly, it's something to keep in mind when deciding whether to register your company for voluntary VAT registration. What would you like to see in our next Whiteboard Thursday series?
@@1stformations Thanks for replying. A video about PAYE would be good, seems very confusing.
@@johncarpenter8651 Thanks John, we will pass this onto Nicholas and the team!
Short and sweet - great work :)
Thanks! 😊 Stay tuned for more to come. Do you want us to cover anything in particular?
Another great video!
Glad you enjoyed it! What would you like to learn next?
Great video - It would be great if you could do an additional video which explains the additional forms of registration - flat rate & cash accounting schemes
Thanks for your comments Adam! Did you learn anything new from this video? We will pass your suggestion for another video onto Nicholas and the team!
@@1stformations Yes the video was very informative and will help me decide whether to register for Vat
@@adamthomsett1569 We are pleased that it helped you. If you have any comments or suggestions please do let us know.
Very useful stuff, thanks!
Thank you for your comment Scrooger! What other content would you like us to cover on our channel?
@@1stformations Maybe something about best ways to pay yourself (dividends, paye, etc.) - for companies with one and more directors?
@@pawel.laczny Great idea Scrooger! We will pass this onto Nicholas and the team!
Big love for your advice x
Thank you for your lovely feedback, Peter. Have you seen any more of our videos on our channel?
You are a great presenter! Nice video
Thank you Faizan! Nicholas will be pleased to hear your feedback. What would you like to see covered next?
@@1stformations perhaps cover off new VAT rules post Brexit. Thanks
@@faizanjahangir8989 Thanks for the suggestion. We will be sure to pass this onto Nicholas and the team.
I love the explanation on the whiteboard. Can I download it from somewhere as a picture or pdf file?
Great to hear you found the whiteboard useful! I would recommend taking a look at our blog post on the pros and cons of VAT registration here - www.1stformationsblog.co.uk/vat-registration-the-pros-and-cons/. Did you learn something new from our video?
It will be great if you can publish some videos about UK Ltd for non residents
Thanks for watching and for your suggestion. We will pass this onto Nicholas and the team! Is there anything specifically you would like to see covered in a Non-Resident focused video?
We have formed a limited company with 1st formation and we are non resident directors. We plan to sell services like digital marketing, design, website development and app development services. Should we consider registering for VAT? Our customers are from global market. Should we only pay the VAT for the customers we serve in UK?
Apologies for the delay in our response. Becoming VAT registered can provide a significant range of benefits to businesses of all sizes; however, there is a good deal of administration involved. A business is legally required to register for VAT when taxable turnover (i.e. overall takings, not profit) for the previous 12 months exceeds the VAT registration threshold of £85,000 (2023/24 tax year), or if it is expected to exceed the VAT threshold in the next 30 days. Unfortunately, we cannot assist with tax and would suggest seeking the advice of an accountant to assist you.
Great video! How easy is it to cancel your VAT registration with HMRC?
It's possible to cancel your VAT registration online and usually takes 3 weeks for HMRC to confirm your cancellation and the official cancellation date. Hope this is useful to you! What would you like to see in our next video?
love these videos, thank you :)
Glad you like them!
Does VAT apply only when I sell to UK citizens? Or should I charge VAT for anyone because my business address is in UK?
PS : Have a UK Registered LTD and sell online targeting many countries
Thanks for your question Mehdi! If you are exporting 'goods' outside of the UK, you do not need to charge VAT on these items. By exporting goods, we mean sending physical items outside of the UK. However, if the delivery address of the items is based in the UK, you must charge VAT on them.
If you are not selling physical goods, you should refer to this list as to whether you are required to charge VAT to non-UK customers: www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers. Does this help you?
in order to claim a reclaim for up to 4 years ago, where it says "From what date do you want the business to be registered?" do I need to backdate up to the 4 years or is it that I can reclaim up to 4 years regardless of the date of registration?
Also, if you are a small business considering voluntary registration and you are looking to reclaim VAT, does it make sense to voluntarily register if there isn't much to reclaim (if the reclaim option is a key driver in registration), if so what amount would you say is just not worth it?
Thanks!!
Hi Amie. You can only reclaim up to 4 years if the business was registered at least 4 years ago.
We always recommend trading companies to register for VAT, because business partners, suppliers, customers etc will see your invoices without VAT and know that your company is a micro-company. As a result, they may be less likely to do business with you. In addition, some larger organisations have policies prohibiting them from entering into contractual arrangements with companies which are not VAT registered.
Have you checked out our VAT Registration Service, which can be found here: www.1stformations.co.uk/vat-registration/
Hello I have got some questions I know who in UK Is possible to use a Company whitout a VAT now my question is
1 can I have an online account without VAT
2 Can I have a VAT if I am not resident
3 If I register for VAT I have expenses even if I don't invoice,and I don't make profit
I have a film production and distribution company, not a shop,
Thank you for comment, Giuseppe.
1. Yes, you can have an online account with HMRC without being registered for VAT.
2. Yes, you don’t have to live in the UK for your company to be VAT registered.
3. Unfortunately, we can only register companies for VAT and are unable to give specific tax advice. We would recommend speaking to an accountant about this question.
@@1stformations Oh my God, At the point 1 I wrong! I mean if can I have a on line bank account for example Revolut, whitout VAT
@@giuseppebonelli Sorry Giuseppe! Yes, you can also have an online bank account without being registered for VAT. Companies are only required to register for VAT if your annual turnover exceeds £90,000.
Could you give an example for the second drawback, please? I am not sure I got the idea in full.
Thank you for your question, Jake! Let’s say you run a pottery business. You purchase £100 worth of clay from your supplier. For this, there is £20 worth of VAT to pay (so the total you pay the supplier is £120).
You then process the clay into your finest pot and then sell it to a customer for £190 plus VAT (VAT being in this case £38, making a total sake price of £228).
The company, being registered for VAT can claim back the original VAT amount of £20.
Even after you substract this £20 from the total VAT you charged your own customer, you would still have a VAT bill to pay of £18.
We hope this helps! :)
@@1stformationsexcellent
Can anyone comment on the paperwork burden of VAT registration?
Hi there! You might find the following useful: www.1stformations.co.uk/vat-registration/
so if my turnover is less than 85k
and i register for vat voluntarily. Do i have to charge a output vat tax to customer?
if i buy a 10 pound product and am able to claim 2 quid input vat, when i sell for 20 do i have to charge output vat? or is it assumed i have vat added into the sale price? because if have to charge vat then it would be 4 quid VAT minus 2 quid VAT reclaimed? so what's the point.
Thanks for the question! Once a company is registered for VAT, it must charge VAT on its products and services. In general terms, using the example you have provided, the VAT would not be assumed to have been added when you sell a product for £20, so you would normally expect the additional VAT amount of £4 to be added (based on the current 20% VAT tax rate). In this way, it is ultimately the end consumer that pays the full amount of VAT. We hope that helps!
@@1stformations Thanks so the video. Just to clarify, if I don't register for VAT, does that mean I do not have to set aside 20 percent from my sales profit for VAT as I am not charging the customer?
@@khalidfazil8545 That is correct Khalid. It should be noted that if you did register for VAT you would not be setting 20% of sales profit, the VAT would need to be added to each sale on top and then set aside for the government, which is slightly different.
Is your turnover going to be or is over £85,000 per year?
Thanks!
You are so welcome! What did like most about the video?
VAT for Pros Business
Thanks for your comment Mohamed! What would you like to see next?
Hi, is there an obligation to register for VAT if turnover of 85K is generated from overseas sales ( USA).
In other words, do overseas sales count towards VAT registration threshold (£85,000)?
Thanks for your question Piotr. If the place of sale is outside of the UK, any income derived from the same will not count towards the VAT threshold. Have you thought of registering for VAT anyway, for prestige reasons and to claim back VAT paid?
@@1stformations thank you for the reply. But what about if I sell from the UK to USA?
@@marynarkw In that scenario, the point of sale would be the UK, and therefore if applicable based on what you were selling, this revenue would count towards your VAT registration threshold.
What type of things will you be selling?