VAT Scheme, Planning & Returns

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VAT & VAT Schemes

VAT is complicated. The technicalities and jargon used by some accountants can make even the longest-standing contractors slightly confused, so we’ve aimed to create a jargon-free, back to basics guide to value-added tax

Firstly, what is VAT ?

Value Added Tax (more simply known as VAT) is a consumption tax which is added to the cost of goods depending on their value. If you are VAT registered, you need to add 20% on top of whatever you sell. To make things a little more complicated, there are certain things that are zero-rated like food, books, newspapers and magazines, young children’s clothing and footwear but I wouldn’t worry about these for now. You can find more information in our guide to VAT.

Register for VAT ?

You have to register for VAT if, in the previous 12 months, your turnover has reached the VAT threshold amount of £85,000 (2019) or you expect it to reach £85,000 in the next 30 days. All the required VAT registrations forms are available on HMRC’s website, but one thing to remember is that the VAT threshold amount can change, so make sure to check each year to make sure you are in or out VAT registration. However, even if your turnover doesn’t meet the threshold for the year, you can still register for VAT voluntarily at any point.