Should I voluntarily register my B2C business for VAT?

Should I voluntarily register my B2C business for VAT?

Beauty therapist asks: In my 1st year of business, is it worth registering for VAT please? I won't be turning over the threshold just yet?

I run an Aesthetics & SPMU business so lots of products, courses and some small assets but plan to invest in a couple of larger expensive machine next year.

Acumenica answers: Almost certainly not.  Even although the A in VAT stands for Added, it’s unlikely you’ll be able to just add 20% to your prices, so you’d need to absorb the VAT into your business costs.

Even on the Flat Rate Scheme, which is likely the best option if you do have to register for VAT, the rate of VAT you’ll pay is 13%. That means that if your business is doing sales of roughly £1,200 per week, you’d be giving £156 of this to HMRC.

Over the year, that amounts to more than £8,000. It’s very difficult to imagine a scenario where this is would be a good business decision. Where it gets slightly complicated is when your business is very close to the threshold. We call this the VAT tipping point. If this is you, we urge you to read this article and then Contact Us.