12th April 2024What is the VAT registration threshold and what’s included?

For some time, the VAT registration turnover threshold for UK businesses was set at £85,000. In the Spring Statement, the VAT threshold for 2024 was increased to £90,000. In this article, Mike Block, Director of VAT, outlines what must be included in the calculation and what should not.

Firstly, the £90,000 refers to “taxable” turnover and includes supplies that are subject to the standard-rate (20%), reduced rate (5%) and zero-rate (0%) of VAT. For example, taxable supplies would include exports of goods from the UK that are zero-rated. It does not include supplies specifically exempt from VAT, such as healthcare or insurance, when made in the UK, as these are not taxable.

Importantly, supplies of services deemed to be “outside the scope of VAT”, as they are treated as supplied outside of the UK, are not included in taxable turnover. This would consist of most intangible services provided to businesses or persons belonging outside of the UK, such as consultancy, royalties or advertising. It is a common mistake for companies to consider such supplies as being within the £90,000 turnover threshold when they should be excluded.

A business supplying services that are treated as supplied outside of the UK can still register for VAT on a voluntary basis, rather than compulsory, due to breaching the turnover threshold.

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