VAT Explained for Tradespeople: When to Register.

You must register for VAT once what you've charged customers over any 12 months in a row goes over £90,000, or if you expect to go over £90,000 in the next 30 days alone. You can also choose to register sooner.

Once registered, you normally add VAT to your prices, record the VAT on what you buy, and send returns to HMRC. You pay over the difference, or claim it back. VAT you collect isn't your money: keep it separate, and plan for when it's due.

• VAT: Value Added Tax, a tax added to the price of most things you sell, once you're registered.
• Taxable turnover: everything you charge customers for, labour and goods, that isn't exempt. It's money in, not profit.
• Threshold: the £90,000 figure that means you have to register.
• Rolling 12 months: any 12 months in a row, like March to February, not just your tax year.
• VAT return: the form you send HMRC, usually every 3 months, showing VAT charged and paid.
• Reclaim: getting back the VAT you paid on business costs.
• Reverse charge: a rule for some building work between businesses, where the customer, not you, pays the VAT to HMRC.
• Exception: HMRC letting you stay unregistered if you only went over the threshold once, for a short time.

1. At the end of every month, add up everything you charged customers in the last 12 months (labour and materials, before costs).
2. If it's over £90,000, you must register within 30 days of the end of that month. You become VAT registered from the first day of the second month after you went over.
3. Before a big job, check whether it alone could take you over £90,000 in the next 30 days. If so, register by the end of those 30 days.

That's turnover, not profit. The 12 months roll, so check every month, not once a year.

HMRC says you can owe VAT from the date you should have registered, plus a penalty. You might then owe VAT on jobs you priced without it.

VAT registered business customers can usually claim the VAT back. Homeowners can't; they just see a higher price. So registering can affect your quotes, your margin and how you compare with others.

Look at existing quotes, contracts, deposits and regular work before your registration date. Don't assume you can just add VAT later.

• Your VAT number and the right details on invoices
• The right VAT rate and date on each job
• Digital VAT records, kept in software that works with HMRC
• Returns sent on time
• VAT money kept aside
• Mistakes corrected the official way

The VAT domestic reverse charge changes who pays the VAT to HMRC on some building work between businesses. It links to CIS, but doesn't apply just because everyone's in construction, and some services supplied on their own are left out.

The invoice, the customer and the work all matter. Get advice from your accountant before applying it, or ignoring it.