With its separate legal standing and limited liability protection, a limited company enables business owners in the UK to capitalize on its multiple benefits. For instance, it limits the owners’ liability to however much they have invested in the company.
Similarly, it is a separate legal entity from its owners, meaning the owners are not personally liable if the company incurs debts.
To know more about how a limited company is created and how you can benefit from it, read our guides:
How to set up a limited company in the UK?
Limited company advantages and disadvantages.
Now, as your limited company grows, so will its turnover. That is where the crucial step of VAT kicks off. Essentially, you will likely encounter the need to register your limited company for VAT at a point.
Moreover, VAT registration is not a process that gets done overnight. Instead, it is a stepwise and lengthy process, which can become easier and manageable with the help of a certified accountant.
Accordingly, Accountingfirms has created this for your ease of learning how to register a limited company for VAT.
Hence, stay tuned!
AccountingFirms makes it seamless to search for the best fit for your accounting and taxation needs by applying filters and getting the most customised result. Let’s hire the best accountant now!
A quick look at what VAT is:
According to HMRC, VAT (Value Added Tax) is a tax added to most products and services that a VAT-registered business sells. Alternatively, VAT is a tax charged on most products and services in the UK by businesses that are VAT-registered.
Are you wondering what a VAT-registered business means?
The answer is that, in line with the HMRC VAT requirements, a business must register for VAT if the value of its taxable supplies exceeds the existing VAT threshold.
When should a limited company register for VAT?
Whenever a limited company’s VAT-taxable turnover crosses the current VAT threshold, VAT registration becomes mandatory.
The VAT threshold is the most crucial element in the VAT concept, as it determines whether your company is eligible for VAT registration. The current threshold for the 2024-2025 tax year is £90,000. Further elaborating, it is the amount of turnover that your limited company can produce before it becomes obligated to register for VAT.
It is worth mentioning that regardless of whether you have been running your limited company for one month or several years, if your business turnover surpasses £90,000 at any point of time within 12 months or you expect it to exceed £90,000 in the next 30 days, you must register for VAT with HMRC.
Bear in mind that the VAT threshold may change in the future. Therefore, it is prudent to stay informed about current HMRC regulations.
Beyond that, even if your turnover remains below the VAT threshold, you can choose to register your limited company through voluntary registration. Interestingly, voluntary registration for VAT allows a limited company to sell its goods and services to VAT-registered businesses and reclaim VAT on its purchases. Besides, it elevates your company’s credibility to potential clients or partners.
How to register a limited company for VAT?
After determining the eligibility for VAT, you must know how to register a limited company for VAT. Accordingly, the following steps describe the VAT registration process for a limited company:
Apply for VAT registration as a limited company:
Once you have confirmed that you must register your limited company for VAT, you have 30 days from the end of the month in which your company revenue exceeded the threshold to do so.
Thanks to the UK government’s digital service, the VAT registration process has definitely become simplified and straightforward. You can viably register online on the HMRC website in just a few easy and short steps. Alternatively, you can register using a paper form known as the VAT1 form.
Provide necessary details for VAT registration:
You can easily register your limited company for VAT online on the HMRC website. To accomplish this, you must give the following details:
- Limited company legal name;
- Its registration or CRN number. Notably, a CRN is a unique identifier or registration number issued by Companies House immediately upon incorporating a limited company;
- The Limited company’s Unique Taxpayer Reference (UTR). A UTR is a 10-digit number the HMRC issues to any business in the UK that has tax obligations, including a limited company;
- The Limited company address and contact information;
- The sort of activities the limited company is carrying out or the nature of the business;
- Corporation tax information;
- Pay As You Earn (PAYE) details, if applicable;
- Self-assessment information, if relevant;
- Bank account details;
- The date from which VAT registration should become applicable or effective. It is usually the date your business went over the VAT threshold. However, you can choose an earlier date if you want;
- A forecast of your company’s VAT-taxable turnover for the next 12 months.
Meeting the above-cited criteria is crucial for fulfilling the VAT registration requirements for a limited company. Besides, following the registration, you must begin charging clients or consumers VAT by applying it to all the products and services. Likewise, VAT must show on all of your customers’ invoices to keep track of how much they paid.
To learn more about what is needed in VAT, read our blog: What are the VAT requirements for a Limited Company?
Complete the VAT returns process:
After registering your limited company for VAT, the next step involves completing and submitting VAT returns. It is another key consideration when learning how to register a limited company for VAT.
VAT returns are usually submitted quarterly in line with HMRC VAT regulations. In addition, these returns reflect the company’s VAT-taxable turnover and VAT balance (the VAT charged on sales and paid on purchases).
Moreover, it is vital to keep accurate records of all your VAT invoices and receipts to complete your return appropriately, for it allows HMRC to calculate how much you must pay or get in refunds.
How Accountingfirms can help your limited company with VAT registration?
Understanding how to register a limited company for VAT is vital in your business journey. However, it can become strenuous and challenging when you have other high-priority tasks that require your attention.
As a result, there is a possibility that you might miss some significant steps or make some mistakes. Therefore, why not let a certified accountant relieve you of VAT-related worries? A skilled accountant has all the relevant information and will handle your company’s VAT registration from start to finish.
In this respect, Accountingfirms might just be the perfect option for you. We are a price comparison website that enables you to find a cost-effective accountant based on your location.
To elaborate, the accountants listed on our directory list can help you in the following ways:
- Assist you with limited company setup, including registration with the Companies House;
- Offer professional and comprehensive preparation of VAT registration for your limited company;
- Provide thorough assistance in creating your Government Gateway account;
- Ensure you secure a unique VAT registration or identification number;
- Ensure HMRC sends you a VAT certificate as proof that your limited company is now VAT-registered.
- Help with the VAT rates applicable to your goods or services
- Use an efficient bookkeeping system to keep track of VAT on all sales and purchases of your company;
- Help you choose the most viable VAT scheme for your limited company;
- Provide detailed guidance on how VAT will impact your pricing and profit margins.
Summary:
In essence, VAT is an inevitable concept for a business that qualifies for it. Consequently, by understanding the core steps of how to register a limited company for VAT, you can stay compliant with HMRC regulations and ensure your limited company keeps heading in an upward trajectory.
Disclaimer: The information provided on AccountingFirms.co.uk is for informational purposes only and should not be considered as financial advice. Always consult with a professional accountant to ensure compliance with UK laws and regulations.