Vat what is turnover

In some cases, entire income streams are VAT-exempt. This includes:. There are certain situations in which items or supply streams are also not included in your taxable turnover:. The industry that your business is in can also have a big impact on what income is included or excluded from your taxable turnover. There are a few things that HMRC has made clear that should be included when determining the taxable turnover of a business, including:. Turnover is a fairly simple calculation that can be done regularly and can be a good indicator of the financial health of the business.

The turnover of a business should be easy to determine with accurate records: find the total sales amount for a given period. You must have Javascript enabled to submit this form. We are committed to keeping your information safe.

Read our Privacy Policy to find out more. Keep an eye on your inbox for helpful guides from FreeAgent. Registered in sunny Scotland No. What is turnover? Definition of turnover Turnover is accounting terminology for sales. Example of turnover : A business prepares its accounts to 31st March each year. Keeping track of your business's profits With FreeAgent there's no need to run a report every time you want to track profit.

For EU business customers, there's a different set of rules that apply. The reduced rate may apply depending on the type of product or service. It is generally charged on sanitary products, children's car seats and energy saving measures. For instance, it will apply to mobility devices if it is purchased by an individual over 60, and installed in his or her home. Any accountant should be able to quickly go over your sales and expenses and tell you which categories you do most of your business within.

Some examples of zero-rated items include books, newspapers, children's clothes and shoes and goods you export to non-EU countries.

A few examples of exempt items include insurance, medical services provided by doctors and postal service. The full list of exempt items can be viewed on the Gov. These transactions should however still be recorded in your general business accounts.

These items include employee salaries, charges imposed by the government and donations to a charity. If your turnover is below a certain threshold, you will have no legal obligation to pay VAT.

If you fail to register on time , you'll need to pay what you owe from the date that the registration should have been effective. HMRC may also impose a penalty, depending on the amount you owe, how late your registration is and other situational factors. You'll need to ensure you're tracking this and can be done easily with accounting software like FreeAgent.

We also include this for free with all of our accounting packages. In certain circumstances, it can be beneficial to register for VAT - even if you're not required to. This is the most common VAT scheme for smaller businesses with some that have an annual filing scheme this is reserved for larger companies but can still mean monthly and quarterly filing.

This is covered below but isn't a common requirement for the large majority of businesses in the UK. With quarterly VAT filing, this means that you'll need to make sure you're on top of your accounting admin at the end of each VAT quarter end to ensure you file and pay the right amount of VAT. You'll find that you'll fall into one of three groups for your VAT quarter end and filing period:.