Currently the VAT registration threshold is set at £85,000 of taxable income. Taxable income comes from anything you provide by way of business – goods or services – which are subject to any of the taxable VAT rates here in the UK – Standard, Reduced or Zero.
However, when working out whether you should be VAT registered you also need to take into account, not just income you generate, but also the values of certain services that you buy in. Yes – certain costs get added into your income in order to establish whether you have exceeded the VAT registration threshold.
Source: centurionvat.com
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