HM Revenue and Customs (HMRC) has launched a digital tool to help non-VAT registered businesses estimate what registering for VAT may mean for them, and their profits.

The VAT Registration Estimator, which is available for free on gov.uk, has been designed to show businesses when their turnover could require them to register for VAT, and what the impact might be on profits.

Currently, a business must register for VAT if:

• Their total VAT taxable turnover* for the previous 12 months is more than £90,000 (known as the ‘VAT threshold’). This increased from £85,000 on 31 March 2024.
  
  Businesses can also register for  VAT if their taxable turnover is less than £90,000 - this is known as voluntary registration.
   
• They expect turnover to go over the £90,000 VAT threshold in the next 30 days.
   
• They are an overseas business not based in the UK and supply goods or services to the UK (or expect to in the next 30 days) – regardless of VAT taxable turnover.

*Taxable turnover is the total value of everything a business sells that is not exempt from VAT.

A VAT-registered business must charge VAT on eligible sales and can usually reclaim it on eligible purchases. The VAT Registration Estimator lets businesses estimate what VAT might be owed or reclaimed when they register. It also links to further information about the registration process. 

Using the VAT Registration Estimator:

Before starting the VAT Registration Estimator, businesses will need details of income and costs, and the VAT rates that apply to them. It takes around 20 minutes to complete and none of the information submitted is recorded by HMRC. 

You will be asked to:

• Read the information online about what the VAT Registration Estimator tool does and use the links to the guidance for more information.
• Input whether the business is, or will be, based in the UK
• Input your approximate business income and business costs for the time period you wish to estimate, up to 12 months. You can also use this if you are setting up a new business
• Use the guidance links provided to choose the VAT rate(s) for your business income and costs - as an estimated percentage of zero, reduced or standard rated, or VAT exempt, goods and services
• Then input if you would prefer to add VAT to, or absorb VAT into, your current or estimated selling price
• Check your answers and complete the form to review the results, which you can save and print.

Find out more about the VAT Registration Estimator on gov.uk. You can also watch a recorded webinar from HMRC about the new digital too.

For help and support with access to finance and funding, visit the Finance and Funding Toolkit on the North East Growth Hub.

You can also book an appointment to speak to one our expert Business Support Advisers to understand what finance and funding is available to you and your business.