• Swindon & Wiltshire Experts
• Tuesday June 4 2024
• Author Name: Michael Blaken

If you’ve put up your prices, check how close you are to the VAT threshold – Optimum Professional Services

Businesses that put up their prices as inflation soared need to check how close they are to the VAT threshold, warns Michael Blaken of Optimum Professional Services.

It was all-change for VAT in April, when the threshold at which a business must register for VAT rose for the first time since 2017.

It increased by £5,000, from a rolling 12-month turnover of £85,000 up to £90,000.

While the increase is welcome, it is relatively small, and isn’t in line with inflation; an inflationary rise would have seen the threshold at around £110,000.

There are concerns that the new £90,000 threshold could still inhibit growth, as businesses that are approaching the VAT level may choose to dial down or plateau their output to ensure they remain beneath it.

Fear of being undercut by non-VAT registered – and therefore cheaper – competitors is at the root of this.

And while inflation is coming under control, this just means the cost of goods and services is rising less steeply.

Businesses which put up their prices need to carefully monitor how near they are to that VAT threshold, and make sure they register accordingly.

It is essential to keep a close eye on turnover and make sure you register in time. Last summer, it was taking HMRC to provide a VAT registration number – in some cases, this was 40 days or more.

Fortunately, HMRC is generally getting these out a lot quicker now, taking away some of the stress of the wait.

Michael Blaken is accounts director at Optimum Professional Services. https://www.optps.co.uk

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