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The UK VAT registration threshold is currently £77,000 of taxable sales. This means that if you have sales that would be subject to zero or standard VAT you need to the check the level of sales in a 12 month period to see if it is under or over the VAT threshold.

What if I have a variety of sales?

If you have a mixture of sales, some of which would be exempt from VAT and some that are subject to VAT then you just calculate if you have reached the VAT threshold by measuring the amount of sales that are subject to VAT. Zero and standard rated goods or services are considered taxable supplies, however, exempt goods or services are non-taxable supplies.

[note color=”#ADD8E6″]VAT Threshold Example

Helen has a sole trader business providing beautician services and also trains other beauticians. If the training/education Helen is provided by a sole proprietor (which in this case it is) the tuition is exempt for VAT purposes, however, the beautician services are taxable supplies. Her total sales for the last month is £80,000 so she is concerned that she should have been VAT registered, however, upon analysis of the sales, £65,000 of the sales relate to beautician services and £15,000 relate to training, therefore only the £65,000 counts towards the threshold, so she is still within the VAT threshold, and does not have to compulsorily register for VAT. [/note]

Categories: HMRCVAT