Year-End Tax Guide 2023/24: VAT
Discover thresholds, schemes, and MTD rules. Elevate your business with these key considerations for seamless VAT management.
Navigating the VAT System
Around 2.7 million businesses in the UK are registered for VAT, which is usually charged at 20% on the sale of goods and services.
Your business must register for VAT when it has a taxable turnover of more than £85,000 in the previous 12 months or if it expects to exceed this threshold in the next 30 days.
Your VAT taxable turnover is the total of everything sold that is not exempt or outside the scope of VAT. You can voluntarily register for VAT, and also voluntarily deregister if your taxable turnover is expected to be less than £83,000 over the next 12 months.
VAT schemes exist to simplify accounting for VAT, including the cash accounting scheme, annual accounting scheme and the flat-rate scheme.
MTD for VAT
Most VAT-registered firms need to keep digital records of their sales and file monthly or quarterly VAT returns using HMRC-approved software under the Making Tax Digital (MTD) regime.
From 1 January 2023, HMRC moved to a points-based penalties system to encourage good taxpayer behaviour. Stringent rules around the way businesses digitally link their software and upload their VAT returns were also introduced at this time.
MTD for VAT applies to all VAT-registered businesses, regardless of whether their taxable turnover is above the current VAT-registration threshold or not. They are required to use MTD-compatible software to meet their VAT reporting and record-keeping obligations.
Key Considerations
- Could your business use one of the simplified accounting schemes?
- Do you need to register your business for VAT?
- Are you entitled to claim VAT bad debt relief?
- Are you accounting for VAT correctly on the fuel used for private motoring? Should you be accounting for the appropriate scale charge?
- Are you reclaiming VAT only where you are entitled to? You are not entitled to reclaim VAT on certain assets or expenses. For example, only certain types of business may reclaim VAT on cars.
- If you are registering for VAT for the first time, you can reclaim the VAT on certain pre-registration expenses including services you have paid for in the six months prior to registration and any goods or fixed assets you still have (or that were used to make other goods you still have) in the four years before registration.
Year-End Tax Guide 2023/24
If you would like to access our full year-end tax guide, simply click here to view the PDF.
Alternatively, you can view an area specific mini blog from the list below:
1. Personal Allowances and Reliefs
2. ISAs
5. Property Tax
7. Business Asset Disposal Relief
9. Tax-Efficient Staff Benefits
10. Corporation Tax
11. Penalties
Set Yourself up for Success
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