A guide to the VAT registration threshold 2019

Value Added Tax (VAT) registration shouldn’t leave you stressed, nor should it be put off. In this guide, we’ll give you a brief rundown of the VAT registration threshold 2019 along with information on when and how to register your e-commerce business.

Whether or not your e-commerce business has passed the VAT registration threshold, 2019 could still be the right year for you to put in place the processes that will ease your growth. You may be close to the threshold, or maybe you have surpassed it but are yet to register. Forewarned is forearmed, so here’s what you need to know.

What is VAT? 

VAT, or value-added tax, is added to the costs of products. If you are VAT-registered, you will pay VAT on your purchases, such as stock and website hosting, and have to pass the VAT on to your customers. As an e-commerce business, this can decrease your profit margins as your customers are unlikely to be VAT registered themselves, but as well as having some downsides, there are also upsides

VAT registration threshold 2019

The VAT registration threshold 2019/20 is £85,000. This means if your business’ taxable turnover exceeds this limit, or is going to in the next 30 days, you must register. The date of registration should be the date you realise your business will exceed the threshold, not when it hits that point.   

Additionally, if your business had a taxable turnover £85,000 or more in the last 12 months and you haven’t registered yet, you must do so. Again, there is a 30-day cap. You must register within 30 days of the end of the month your e-commerce business passed the threshold.

There are some particular cases in which you will need to register despite not hitting the threshold, but your accountant will be able to advise you if this is the case.

It is important to keep an eye on the new VAT registration threshold each year, which is posted 1st of April. If you suspect you have passed the threshold in a previous tax year, you must still report it and register. HMRC’s list of historic VAT thresholds will help you to ascertain this. 

How to Register

Business’ can register online using your Government Gateway credentials, or you can instruct your accountant to do so on your behalf. 

As you go through the registration process, you will need to decide which VAT scheme is right for your business. They each have their advantages and disadvantages, and we can help you choose the right VAT scheme for your business

Do I need to register for VAT?
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Making Tax Digital 

Since the 1st of April 2019, the Making Tax Digital (MTD) initiative has come into play for VAT. Further amendments in future years will eventually bring all taxes under this initiative, but for now, it is only relevant for VAT. Under MTD, all VAT returns must now be submitted digitally, in order to provide the timeliest information and simplify the process for all involved.

In order to comply, you will need to use MTD bridging software, such as Xero, to submit your VAT returns. Spreadsheets are no longer deemed to be sufficient. Further guidance can be viewed on the HMRC website or through our guide.

Next Steps 

If the thought of crossing the VAT threshold leaves you unsure about matters for your e-commerce business, get in touch today. We can help you plan for VAT registration, choose the right scheme and set up Xero for Making Tax Digital. 

The best time to start is now.


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