Step 2 Work out your business and household budget

​Value added tax (VAT)

The rate of VAT depends on the types of goods or services you supply. The rates can change depending on decisions the Government makes. You can use our Tax information sheet to find out what the current rate of VAT is.

See our fact sheet:

Tax information sheet.

If your business does not have yearly sales that add up to the registration level shown on the Tax information sheet, you do not need to be registered for VAT. If you are already registered for VAT and you want to be removed from the register, you will need to show that your turnover will be less than the deregistration level (shown on the Tax information sheet) over the next 12 months. You could use Your budget to show this to HMRC.

Information:

limited companies

If you are a sole trader or in a partnership, you are taxed on your profit before drawings, not how much (or how little) you draw from the business. This is different for limited companies. Contact us for advice.

Use your VAT return for the last quarter to work out the average VAT you pay each month. Unless you do a lot more (or a lot less) business from one quarter to the next, this is usually a reasonably good guide.

If you need help understanding VAT, have problems working out your costs each month, or have any other questions, contact us for advice.