Tag Archive for VAT

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Sole traders and VAT

by Henry Williams • February 27, 2026 • 0 Comments

By Henry Williams on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Whether or not you need to pay Value Added Tax (VAT) as a sole trader depends entirely on your taxable turnover. Basically, if at the end of any month your taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days, you need to register for VAT. You must do so within 30 days of the end of the month you went over.

You can also voluntarily register for VAT even if your turnover is under the threshold. Some sole traders choose to do this so that they can claim back the VAT on goods and services purchased for their business or to avoid financial penalties from accidentally going over the threshold.

Below, we explain how to register for VAT as a sole trader, how much you need to pay, VAT rates, charging VAT to customers, and MTD for VAT.

Registering for VAT as a sole trader

You can register for VAT online with HMRC. Once approved, you should receive a unique VAT number relevant only to your business within a few weeks.

It will be provided

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What is the VAT threshold?

by Tim Adler • October 16, 2025 • 0 Comments

By Tim Adler on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

The VAT threshold is the volume of annual turnover at which businesses are required to register for value-added tax (VAT).

Since April 2024, the UK VAT registration threshold has been £90,000.

VAT thresholds for previous years are as follows:

2014–2015 – £81,000

2015–2016 – £82,000

2016–2018 – £83,000

2019-2024 – £85,000

Since 1 April 2024 – £90,000

Once your business’s turnover reaches the VAT threshold, you have 30 days to register for VAT with HMRC. When this process is complete, your business has extra responsibilities including:

Charging VAT on your products or services

Paying VAT on the goods or services supplied by your vendors

Submitting your VAT return to HMRC every quarter (unless you opt into the Annual Accounting Scheme*) and maintaining a VAT account and records using Making Tax Digital (MTD)-compatible software

*Most VAT-registered businesses file quarterly VAT Returns (some monthly). If you opt into the Annual Accounting Scheme, you file one return per year with instalments. All VAT-registered businesses must keep digital records and file via MTD-compatible software

VAT registration

Registering for VAT is a legal requirement for businesses that exceed this threshold, and the threshold is reviewed regularly by HMRC.

You need to register for VAT

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The EU VAT e-commerce package: how accounting can help

by Dan Matthews • June 29, 2021 • 0 Comments

Originally written by Dan Matthews on Small Business
On 1 July, the European Union will change the way in which VAT is reported and paid, potentially impacting anyone in the UK operating a business selling products & services online to consumers and practicing distance selling.
“The Covid-19 pandemic has caused a big shift in working patterns and, as a result, a lot of people have out of necessity or opportunity taken to start up an e-commerce business or switch to digital selling,”
“The change to EU VAT reporting will help. It’s designed to simplify tax reporting, promote ecommerce and increase online cross-border transactions. It will support small business and remove barriers in a post-Brexit environment.” says Asif Chaudhry, Director, Product Marketing at Sage.
What will change?
The changes are that for sales to consumers (basically anyone without a VAT registration) the VAT is charged based on which country the customer is in, not the country of the seller. Prior to this date there were thresholds, and businesses selling below these thresholds could charge their home VAT rates which avoided needing to know many different VAT rates.
Alongside this change the EU is expanding their one stop shop (OSS) simplifications which optionally allow businesses outside of the

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HMRC to go easy on small business strangled with Covid debt

by Timothy Adler • June 23, 2021 • 0 Comments

Originally written by Timothy Adler on Small Business
Small businesses struggling with Covid debt will not be forced to pay overdue tax to HMRC immediately, says business secretary Kwasi Kwarteng.
HMRC had manoeuvred itself to be first in line to be payed-out should a small business go bust post-Covid. Being pressured into payment by tax collectors can be an extremely unpleasant experience for owner-directors of small businesses.
But Mr Kwarteng has told the Institute of Directors and business group R3, which represents insolvency and restructuring practitioners, that HMRC will go easy on small businesses unable to pay tax because of Covid-19 debt.
>See also: Small business owners who duck out of repaying Covid debt face ban
The government wants to avoid a tsunami of insolvencies this summer.
The news will come as a relief to small business owners, who already have enough to worry about with a stop-start reopening post-lockdown just as Covid-19 financial support such as Bounce Back Loans start having to be repaid.
Insolvency practitioners have warned that many small businesses will struggle to stay afloat from July when emergency Covid-19 financial support measures begin to be wound down.
In a letter, obtained by the Financial Times, Mr Kwarteng wrote that HMRC would be updating its

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HMRC to go easy on small business strangled with Covid debt

by Timothy Adler • June 23, 2021 • 0 Comments

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Kevin Hollinrake calls for abolition of business rates

by Timothy Adler • February 13, 2021 • 0 Comments

Originally written by Timothy Adler on Small Business
Conservative MP Kevin Hollinrake has reiterated his call for the abolition of business rates ahead of next month’s Budget on March 3.
Business rates, he said, are “anachronistic” and should be replaced instead by a 3 per cent increase in VAT that all businesses would pay.
This 3 per cent increase in VAT to 23 per cent would affect all businesses, not just retailers, and the £30bn raised each year would cancel out the scrapping of business rates.
>See also: Just when you thought it couldn’t get worse, business rates return in April
Currently, the Treasury appears to be leaning towards a 2 per cent online sales tax to be announced in the autumn statement.
But Mr Hollinrake points out that most businesses now have a mixed model of physical and online sales, and calculating which sales were digital would be complex.
Mr Hollinrake presented his bill calling for the abolition of business rates last month in the House of Commons. So far, there has been no Treasury response. But his conversations with retailers such as Tesco, B&Q and Screwfix have been positive, as has the response from the ACS, which represents convenience stores.
>See also: Chancellor Rishi Sunak may

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Kevin Hollinrake calls for abolition of business rates

by Timothy Adler • February 12, 2021 • 0 Comments

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Half of small business exporters struggling with new rules post Brexit

by Timothy Adler • February 11, 2021 • 0 Comments

Originally written by Timothy Adler on Small Business
Half of mainly small business exporters that send goods into the EU are facing difficulties trading post Brexit.
For manufacturers the problems are just as bad, with 51 per cent finding life exporting to Europe more difficult after Brexit, according to a British Chambers of Commerce survey.
Overall, nearly one third of businesses (30 per cent) surveyed said they found trading more difficult in January following Britain’s exit from the EU.
>See also: Half a million businesses at risk of collapse without more support
The main problems cited by exporters over Brexit were increased administration, costs, delays and confusion over what rules to follow.
In particular, the BCC would like to see firms be able to write off what they spend on extra admin and customs costs against their tax bill, and for the government to push back against the EU imposing extra health checks on food and animal exports from April, as well as full customs checks from July.
The BCC would also like to see the EU and UK government work together to try and minimise unhelpful burdens, including aspects of rules of origin and VAT.
The research is the first large survey of how companies are coping

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How to avoid paying £130,000 in VAT registration fees if you export to EU

by Timothy Adler • February 4, 2021 • 0 Comments

Originally written by Timothy Adler on Small Business
Businesses selling goods into Europe face having to pay for VAT registration in all 26 EU countries, costing up to £130,000.
Britain left the EU on January 1 and small businesses now have to register for VAT in each country they sell directly to customers in. Plus they will need to have a physical business representative in each country, and not just be brass-plate company.
Given that it costs between £3,000 and £5,000 to register for VAT per EU country, small businesses could be left with a bill of £130,000 just for the right to pay VAT in each territory.
>See also: Local authorities blame government for slow release of Covid-19 grants
Sean Glancy, VAT and indirect taxes partner at accountant UHY Hacker Young, said: “The risk here is that a UK business moving goods to consumers in, for example, Germany, Italy and Austria would have to register for VAT in all of these countries. If that multiplies across Europe, that is a lot of registrations, time, resource, and cost.”
The good news is that this is only until July 1, when the EU will bring in a one-stop-shop for VAT registration throughout Europe, which means UK businesses

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Businesses ‘crippled’ by Tier 4 call for more government help

by Timothy Adler • December 31, 2020 • 0 Comments

Originally written by Timothy Adler on Small Business
UPDATED: There are now over a million business premises shut down across the UK, according to the Federation of Small Businesses.
Many of these small businesses have “no cash reserves left”, according to the FSB, having invested heavily in making themselves Covid secure.
Meanwhile, business group UK Hospitality said that the sector has been “effectively shut down” from today, following yesterday’s widening of Tier 4 restrictions to much of the rest of Britain, which limits pubs, cafes and restaurants to takeaway only.
Three quarters of the population of England are now living under Tier 4 rules, which also require non-essential retailers such as clothing and homeware stores, gyms and hair and beauty salons to close.
>See also: Which small businesses can stay open in Tier 4 lockdown?
Kate Nicholls, chief executive of UK Hospitality, has called for new support grants and the extension of the reduced VAT rate and the business rates holiday beyond March if the government wants to avoid “hundreds and thousands of job losses”.
On Tuesday, FSB chairman Mike Cherry wrote to Rishi Sunak proposing a five-point package including converting Covid emergency debt into shares for small business employees, another round of grants and a German-style

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