Value Added Tax (VAT) involves complex regulations, keeping accurate records, and ensuring timely submissions. It gets overwhelming for small business owners already dealing with various aspects of start-ups.

However, you can simplify the process of VAT returns with the right approach and tools. Here’s how small business owners can streamline their VAT processes and focus more on growing their business.

“Want some professional help in your VAT return process? Get in touch with our team – we are always ready to empower small businesses with expert financial strategies.”

Understanding The Basics Of VAT

Simply put, VAT is consumption tax added to goods and services. Companies are required to collect it from their clients or customers and send it to the government.

As of 2023, data shows there are approximately 2.72 million VAT-registered businesses in the UK, including many small businesses. Any companies with a taxable turnover above the VAT threshold (£85,000) must register for VAT.

How Much VAT Is Charged In The UK For Small Businesses?

The standard VAT rate is 20%; however, for some products, such as food or energy bills, a lower rate may be as low as 5% or even 0%. Usually, for necessary items such as food or children’s clothing, the VAT can come down to 0%. The following table lists the categories and rates for VAT.

Rate % Rate Applies To:
Standard 20% Most goods and services
Reduced Rate 5% Some goods and services: car seats, home energy
Zero Rate 0% Zero-rated goods and services: most food, children's clothes

Source: Globig

When Should You Register And Submit VAT Returns To HMRC?

To register and submit your VAT returns properly, you must monitor your turnover on a rolling 12-month basis to pinpoint the precise moment at which it exceeds the £85,000 VAT registration threshold. When the threshold is breached, you need to inform HMRC within 30 days as an owner. The business must be registered for VAT by the first day of the following month.

Once your start-up is registered for VAT, businesses are generally required to submit VAT returns to HMRC quarterly. These returns include a thorough breakdown of the VAT the company collected and paid during the designated time.

Essential VAT Schemes

Selecting the appropriate VAT scheme can streamline your VAT procedure. Various VAT schemes are available to meet different business demands. Some of the common schemes include:

  • Standard VAT Accounting – Suitable for most businesses where VAT is paid on invoices issued.
  • Flat Rate Scheme – Simplifies VAT accounting for small businesses with a turnover of less than £150,000 (or the equivalent in other currencies).
  • Cash Accounting Scheme – An excellent option for companies who are worried about cash flow because VAT is only paid when invoices are paid for, not when they are issued.

To Conclude

Invest time training yourself and your team about VAT procedures and tax management strategies. Getting expert assistance from a company like Omer & Co Accountants is sometimes the best approach to streamline VAT returns. Get in touch with our experts at 020 8850 0700 or send an email to for any VAT-related assistance.