02/10/2026
💷 VAT REGISTERED? HERE’S A DIFFERENT WAY TO THINK ABOUT YOUR VAT BILL…
Once your business reaches the VAT registration threshold, you’ll usually need to register for VAT and start charging VAT on your taxable sales.
One of the biggest frustrations I hear from business owners is:
“I’ve got another huge VAT bill to pay this quarter!” 😩
But the important thing to remember is — the VAT you collect was never really your money in the first place.
For example, if you charge a customer £120 including VAT, £20 of that is VAT collected for HMRC.
You can then claim back the VAT you’ve paid on eligible business expenses. At the end of the VAT period, you generally pay HMRC the difference between:
➡️ VAT you’ve collected from customers
➖ VAT you’re entitled to reclaim on business expenses
🟰 VAT payable to HMRC
This is why it’s so important to plan ahead when approaching the VAT threshold.
Your pricing may need to be reviewed so that VAT is properly factored in, rather than simply absorbing the additional cost and reducing your profit margin.
And most importantly — don’t treat the VAT you collect as available business cash. Consider putting it aside as you go so that when your quarterly VAT return is due, the bill doesn’t come as a nasty surprise.
📊 Are you getting close to the VAT threshold and wondering what it will actually mean for your business?
Don’t wait until you’ve crossed it to start thinking about your pricing, cash flow and VAT obligations.
J. Watts Accountancy Services can help you prepare BEFORE you hit the threshold, work out how VAT could affect your prices and margins, and make sure you’re ready when the time comes.
📩 Send us a message today to arrange a chat about your business and VAT. A little planning now could save a lot of stress later.
