do i charge vat?

[golfgtidog]

hi ive just started up as a sole trader as a builder doing property maintenance , i have nt registered for vat as i dont think i will earn more than £60,000 in my first year but do i still charge for vat on my invoices and whats the laws on this . thankyou in advance martin

 

[DuaneJackson]

No - you can't charge VAT if you are not VAT registered.

 

[golfgtidog]

thankyou

 

[KM-Tiger]

No - you can't charge VAT if you are not VAT registered.

But you can voluntarily register even if your turnover is below the threshold.

You would then have to charge VAT, but you would be able to reclaim the VAT on inputs, ie the stuff you buy to do the jobs.

If the majority of your customers are VAT registered businesses, this might be worth considering. Your charges will be considered excluding VAT, so adding it won't affect your competitiveness, and you can reclaim the VAT on your inputs.

If the majority of your customers are not VAT registered, then adding it will increase your price to them and make you less competitive.

 

[David Shephard]

Also remember that vat turnover is based on a rolling twelve month period. When you come to the end of your first twelve month period, you then add on month 13's turnover and deduct month 1's turnover; then add on month 14's turnover and deduct month 2's turnover, and so on through the second year; if you then go through the £61,000 turnover limit, you need to register for vat.

Very often small businesses fail to grasp this aspect of the vat registration process. In the early months of your startup, your turnover can be quite low, but by month 13 & 14 and beyond, things could be quite different.

David