Key takeaways
- HMRC has launched a new VAT Registration Estimator to help businesses determine if they need to register for UK VAT.
- The UK VAT threshold increased to £90,000 from April 2024.
- The Estimator provides guidance only — it helps explore scenarios but does not give personalized advice.
- It’s suitable for UK-based and foreign businesses selling in the UK.
- The tool requires basic business income and cost data, along with VAT rate details.
- HMRC does not store any entered data; the tool is for private use.
- Businesses can use it to assess both mandatory and voluntary VAT registration benefits.
HM Revenue and Customs (HMRC) has introduced an innovative digital VAT tool aimed at assisting businesses with their UK VAT registration obligations. In response to feedback from small businesses, the new VAT Registration Estimator has been launched to provide an online tool for determining when their turnover might require UK VAT registration and how it could affect their profits.
Understanding UK VAT registration
A business is required to register for UK VAT if:
- Their total VAT taxable turnover for the past 12 months exceeds £90,000. Prior to March 31, 2024, this threshold was £85,000.
- They anticipate their turnover will surpass the £90,000 VAT threshold within the next 30 days.
- They are a foreign business not based in the UK but supply goods or services to the UK (or plan to within the next 30 days), regardless of their VAT-taxable turnover.
Upon registration, a business must charge VAT on eligible sales and is typically allowed to reclaim it on eligible purchases.
What is the VAT Registration Estimator?
The VAT Registration Estimator is designed to aid any business in understanding the potential consequences of VAT registration. It also connects users to further information regarding the registration process. Moreover, it serves as a valuable resource for businesses operating below the threshold but considering voluntary registration.
The Estimator was developed with input from small businesses and trade representatives who tested and provided feedback on the tool before its launch. The goal is to enhance businesses' understanding of VAT registration through combined guidance and services.
How to use the VAT Registration Estimator
To use the VAT Registration Estimator, you will need information about your business income and costs, and the applicable VAT rates. Follow these steps:
- Gather details on your business income and costs and the VAT rates applicable to them.
- Enter whether the business is, or will be, based in the UK, along with your approximate business income and costs for up to 12 months. This is also applicable for new business setups.
- Select the VAT rate(s) for your business income and costs, estimated as a percentage of standard-rated, zero, reduced, or VAT-exempt goods and services.
- Specify whether you prefer to add VAT to your current or estimated selling price, or to include it within the price.
- Check your answers, complete the form to review the results, and save or print them.
The Estimator is accessible at any time, free of charge, and typically takes around 20 minutes to complete on first use. Importantly, HMRC will not record the details inputted by users.
The VAT Registration Estimator is a guidance tool designed to help businesses determine if UK VAT registration is suitable for them. It allows for experimentation with various inputs and outputs but does not provide personalized business advice.
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Frequently asked questions
1. What is the HMRC VAT Registration Estimator?
It’s an online tool launched by HMRC to help businesses estimate when they need to register for VAT in the UK and understand the potential financial impact of VAT registration.
2. Who should use the VAT Registration Estimator?
Any business—UK-based or foreign—that sells goods or services in the UK and wants to understand if or when VAT registration is required.
3. What is the current UK VAT registration threshold?
As of April 1, 2024, the VAT registration threshold is £90,000 in VAT-taxable turnover over the past 12 months.
4. Can foreign businesses use the Estimator?
Yes. Non-UK businesses supplying goods or services in the UK can also use the tool to assess their VAT obligations.
5. Does HMRC store the data entered into the Estimator?
No. HMRC does not record or save any data entered — it’s a private, guidance-only calculator.
6. How long does it take to complete the VAT Estimator?
It typically takes around 20 minutes to complete the form on first use.
7. What if my turnover is below the VAT threshold?
You can use the tool to explore the benefits of voluntary VAT registration, such as reclaiming VAT on business expenses.
8. Where can I access the Estimator?
It’s available free of charge on the official HMRC website.
