I’m self-employed – do I need to pay VAT? 13

VAT regulations differ for self-employed individuals depending on the turnover of your business.

If you are unsure whether you need to register to pay VAT, here’s a quick guide that will help you decide…


Who has to register for VAT?

Any business making less than £85,000 annually does not have to register for VAT. This threshold will not change for 2 years from 1 April 2020.

This means that if your company only has a small turnover does not have to add VAT onto its products or services.

If your turnover is above £85,000 per year then you will need to register with HMRC.


Can I register even if my turnover is less than £85,000?

You can still register for VAT even if you don’t meet the requirements.

Often businesses choose to register as some clients will only work with VAT registered suppliers.


How do I register for VAT?

There are two ways to register:

  1. Online – visit HMRC’s website
  2. Post – download the relevant forms from HMRC’s website

By registering online, you will create a VAT online account which you will need to submit your VAT Returns to HMRC every quarter.


I’m VAT registered – now what?

Once you a VAT registered you must:

  • charge the right amount of VAT
  • pay any VAT due to HMRC
  • submit VAT Returns each quarter
  • keep VAT records and a VAT account


How do I submit a VAT return?

The easiest way to submit your VAT Return is online. You will need your VAT number and an online account.

You can then submit your VAT Return using HMRC ‘s free online service by logging into your account.

Note – You cannot use your online account to send your VAT Return if you’ve signed up for ‘Making Tax Digital for VAT’. In this case you will need to use compatible accounting software instead.

You can appoint an accountant to submit your VAT returns on your behalf.


When are VAT returns due?

You will need to submit a VAT return every quarter. Your online account will tell you when your VAT Returns are due and when the payment must clear HMRC’s account.


What happens if I don’t submit or pay my VAT return on time?

If HMRC do not receive your VAT return or full payment by the deadline they will record a ‘default’. You may enter a 12-month surcharge period and have to pay an extra amount (a ‘surcharge’) on top of the VAT you owe.

The surcharge you will have to pay is a percentage of the VAT outstanding on the due date for the accounting period is in default. The surcharge rate increases every time you default again in a surcharge period.


We hope this article has cleared up some of your VAT questions. If you have any other queries relating to VAT or your business accounts feel free to get in touch.