Do I need VAT for income generated from referral marketing?

Giorgio

Hi all!
I am about to start as self employed because I have income generated from booking.com and other referral marketing activities. Plus I will design websites and do some marketing for a company.

Does any of these activities need me to register for VAT?
Thanks to who will answer!

TomFromCrunch

Hiya Georgio! Thanks for your question. HMRC requires you to register your business for VAT where the following circumstances apply:

Your VAT-taxable turnover (the total of all sales that aren’t exempt from VAT) exceeds the current threshold of £85,000 within a 12-month period (on a rolling basis)
You expect your VAT-taxable turnover to exceed the threshold in a single 30-day period
You only sell goods or services that are exempt from VAT, but you purchase goods to use in your business to the value of more than the threshold from VAT-registered suppliers in the EU.
-

You need to register for VAT within 30 days of meeting any of these criteria. If you know your turnover will reach the threshold soon, you should allow enough time to register.

If you fail to notify HMRC in time, you may be liable to pay a penalty!

There are a number of reasons why it might be worth voluntarily registering for VAT even if your turnover isn't above the VAT threshold.

These include:

You can reclaim the VAT on your business expenses (if you are on the Standard Rate scheme)
You can register for a reduced Flat Rate of VAT to reduce the administration involved in preparing your quarterly VAT return (Flat Rate scheme)
If your clients are large companies who are themselves VAT registered, registering could be advantageous.
Your clients will be used to seeing prices inclusive of VAT, and will be able to reclaim the VAT paid over to your business
It may make your business more credible in the eyes of your clients, in the same way that having a limited company makes you appear more 'professional’.

There's loads more advice on this in our article on the subject. Hope this helps!

Giorgio

Thank you so much Tom,

always very kind and informative. I checked the article you liked me, and this is my situation:
Turnover VAT - taxable expenses Client type Suggested VAT option
Less than £85,000 Less than 1.5% of turnover Mostly non-VAT registered customers Don’t register for VAT

So my income will likely be less than 85k for several years and I won't have customers VAT registered.
My doubt was more about my activity because I read some kind of activity requires VAT regardless of the income, but I didn't find a list of those activities.

Thanks again for the help!

calcvat_uk

If your income is below £85,000 and you mostly deal with non-VAT registered customers, you don’t need to register for VAT unless your business falls under specific categories that require mandatory VAT registration (like selling digital services to EU consumers or financial services). For your activities, such as web design and referral marketing, VAT registration is only necessary if your turnover exceeds the threshold.

You might also find it helpful to use this VAT Calculator to easily calculate your VAT based on your activities. Always a good idea to double-check with HMRC if you’re unsure about specific cases!

If you're a small business owner who loves what they do, there's no better partner than Crunch. We help over 10,000 small business owners from across the UK manage their finances and grow their business. Learn more →

This forum is provided by Crunch. Crunch takes no responsibility and accepts no liability for any content submitted by users of this forum. Terms of Use →