When to register for vat as a sole trader

When to register for vat as a sole trader

Everything You Need to Know About VAT Registration as a Sole Trader in the UK

As a sole trader, VAT registration is something that you need to consider. This is especially true if you’re selling services or products, or are receiving payments from outside of the UK. In this blog post, we’ll discuss what you need to know about registering for VAT, when it’s necessary, and how it can benefit your business.


When to register for vat as a sole trader - When Is It Necessary?

In order to register for Value Added Tax (VAT) in the UK, your sole trading business must have a taxable turnover of £85,000 or more in any 12-month period. This means that if your turnover is less than £85,000 in any 12-month period, then you won’t need to register for VAT. However, if your turnover is more than this amount at any point during the year, then you must register within 30 days.


When to register for vat as a sole trader - Benefits of Registering For VAT

Registering for VAT can be beneficial for your business and isn't something to be scared of.


1. You can recover VAT on your purchases

You can recover the VAT that you have paid on your purchases. This can be a significant advantage, particularly for businesses that make a lot of purchases.


2. It can improve your cash flow

Paying VAT quarterly can be a significant advantage, as it can help to improve your cash flow. This is because you are collecting VAT in and not making the payment until a few months later. 


3. It can make your business appear more professional

When you register for VAT, it can make your business appear more professional. This is because it shows that you are serious about your business and that you are compliant with the law


When to register for vat as a sole trader - How To Register For VAT

If you decide that registering for Value Added Tax (VAT) is right for your business then there are several steps that you need to take before registering with HMRC.

Firstly if you don't already have one, you will need to obtain a Unique Taxpayer Reference (UTR) number from HMRC. You can do this online.

Secondly you will need to complete and submit an online form Vat1A ‘Notice Of Registration’ which outlines the details of the individual responsible for accounting for tax in relation to their businesses; this form must also include information regarding any expected changes in turnover over the next 12 months so that HMRC has an accurate understanding of how much tax may be due from each quarter onwards.

Finally once these forms have been submitted successfully then registration should take no longer than 14 working days before becoming effective; once registered all returns must be submitted on time otherwise fines may apply!


Being a sole trader comes with many responsibilities - one being knowing when to register for VAT as a sole trader. This blog post outlined what requirements must be met before registration becomes necessary as well as some benefits associated with doing so. 


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About the Author

Annette Ferguson 

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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