To VAT or not to VAT?

I’m based in the UK, where we currently have VAT at 17.5%. If your turnover is £70,000 or more, you have to be VAT registered. If your turnover is less than this, then it’s up to you whether you register or not.

You might well ask: what’s the point of registering for VAT if you don’t have to? After all, it’s extra paperwork and hassle isn’t it?

Here’s the reason why you should register, even if your freelance income isn’t anywhere near £70,000 a year:

• If you buy in good and services (anything from a monthly phone bill to a computer) you will be able to claim back the 17.5% VAT these companies add to your bill. So, if you aren’t registered, every bill you pay will be 17.5% more expensive.

You can find out more about VAT from the HMRC website.