1. Do you need to register for VAT
Yes, if turnover is £85K or more.
Optional if turnover is less than £85K.
(You can’t claim VAT on expenses if you don’t register.)
2. Registering for VAT
You can register online with HMRC. You’ll need a Government Gateway ID, National Insurance number or tax identifier, and bank account details.
3. Adding VAT to your prices
Old price x 1.2 = VAT inclusive price (for 20% VAT). Old price x 1.05 = VAT inclusive price (for 5% VAT)
(No price change for 0% VAT)
4. Issuing tax invoices
You’ll need to be able to issue VAT invoices, with extra details like:
- your VAT number
- the VAT rate
- notes showing VAT has been charged
5. Recording VAT
Keep a running tally of the VAT you’ve collected on sales.
Do the same for the VAT you’ve paid on purchases.
You’ll use these numbers to figure out your VAT bill or refund at step 6.
*You will most likely collect more than you pay.
6. Preparing a VAT return
Figure out your VAT bill (or refund).
£2819.74 – £1342.87 = £1476.87 (Money you owe HMRC.)
Now include this in your VAT return and file it online with HMRC.
Think of VAT as money you’re collecting for HMRC. Treat it as their money and you won’t get caught short.
7. VAT due dates
Most businesses file quarterly. The due dates are shown in your online VAT account.
Make VAT less taxing
Learn how software can help with VAT invoicing, accounting, and filing.
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