VAT and PAYE Registration

What is VAT?

Value Added Tax (VAT) is added to the sale of all goods and services and imposed on the consumer. It is generally charged on most business transactions in the UK, and can also be applicable to some items imported from other countries. If your company will achieve a turnover of more than £85,000, you must register for VAT.

Once registered for VAT your company must submit quarterly VAT returns showing the VAT that has been charged on sales and also paid on purchases.

What is PAYE?

Pay As You Earn (PAYE) is a method of paying your company employees (which can include yourself as a Director). Using PAYE your  income tax and national insurance (NI) contributions are calculated and paid through the business. As an employer you are responsible for arranging deductions for tax and national insurance for employees.

All employees must be provided with a wage slip that accurately shows the tax and NI deductions made.

What is needed to register for VAT and PAYE?

You can choose to register for VAT voluntarily. This might be useful if you are buying good from EU countries. You must register your company for VAT with the HMRC if your company exceeds sales totalling the current VAT threshold of £85,000 in a 12-month period. If your company is forecast to exceed this amount within 30 days of trading, you must register for VAT as soon as possible after incorporation.

To register your company for PAYE, the company must register as an employer with HMRC and obtain a login for the PAYE Online. All employee details, record of pay and deductions must be recorded and reported to HMRC.

Think Formations can assist with both VAT and PAYE registrations on your behalf and can provide ongoing support managing your VAT and PAYE submissions and records.