Our tax preparation specialists tell you all about HMRC’s VAT thresholds

At DSR Tax Claims Ltd, we know that working out whether your business is liable for VAT can be a tricky task. That’s why our experts want to help make life as easy as possible for you by sharing our specialist knowledge with you. So, whether you are wanting more information about VAT or need to know about charitable tax relief, our handy guides are here to help. All our information is based on HMRC sources, so you can rest assured that these guides are filled with helpful and accurate information.

What are the VAT thresholds?

The following VAT thresholds have been in place since 1st April 2017:

Circumstance Threshold
VAT registration VAT taxable turnover more than £85,000
Registration for distance selling into the UK More than £70,000
Registration for bringing goods into the UK from the EU More than £85,000
De-registration threshold VAT taxable turnover of less than £83,000
Completing simplified EC Sales List £106,500 or less and supplies to EU countries of £11,000 or less

Further explanation of some of those circumstances is detailed below:

  • Distance Selling into the UK: this happens when a business based outside the UK sells goods to UK or Isle of Man customers who are not VAT registered – for example, private individuals or charities.
  • Simplified EC Sales List: this allows a VAT-registered business in the UK which is supplying goods or services to VAT-registered customers in EU countries to inform HMRC about these supplies.
  • Registering for bring goods into the UK from the EC: you will be required to get a commodity code and pay VAT if you move goods between EU countries. However, you won’t have to pay import duty.

What are the thresholds for VAT Accounting Schemes?

The following thresholds for VAT accounting schemes have been in place since 1st April 2017:

VAT accounting scheme Threshold to join scheme Threshold to leave scheme
Flat Rate Scheme £150,000 or less More than £230,000
Cash Accounting Scheme £1.35 million or less More than £1.6 million
Annual Accounting Scheme £1.35 million or less More than £1.6 million

These thresholds refer to the VAT taxable turnover. VAT Retail Schemes have different thresholds.

Further explanation of some of those circumstances is detailed below:

  • Flat Rate Scheme:  this scheme allows your business to pay a fixed rate of VAT to HMRC and allows you to keep the difference between what you charge your customers and what you pay to HMRC but you can’t reclaim the VAT on your purchases, except for certain capital assets with a value over £2,000. Some businesses may like this because it simplifies the VAT process but expert advice should be sought to make sure it is right for your business.
  • Cash Accounting Scheme: this scheme allows your business to pay the VAT it owes once you have been paid by your customers and reclaim the VAT it is owed when you have paid your supplier. This is in line with cash accounting methods. Usually, you would have to pay VAT if you have invoiced a customer even if you haven’t actually received payment yet.
  • Annual Accounting Scheme: this scheme allows you to make submit 1 VAT return per year, rather than the usual quarterly returns. You would also make advance VAT payments towards your bill, which would be based on your previous VAT return. Some businesses like this because it reduces the number of VAT returns required and may allow cash flow to be more easily managed in some circumstances. Expert advice should be sought to make sure it is right for your business.

How can DSR Tax Claims Ltd help?

We know that working out your VAT can be really confusing – there’s so much to consider and that’s before you start working out the different rate thresholds. Our friendly team of tax specialists at DSR Tax Claims Ltd are on hand to help make life easier for you. We’re the experts at identifying your maximum allowable expenses so call us on 0330 122 9972 – we’re the tax experts you can trust.