Do I need a VAT number in the United Kingdom?

For new and start-up companies in England, obtaining a VAT number is not mandatory, although it is possible to voluntarily register for VAT. It is mandatory to obtain a VAT registration in the following cases:

  • If your VAT taxable sales exceeded £85,000 in the last 12 month period

  • If you predict that your VAT taxable sales will exceed £85,000 in any 30-day (1-month) period

  • If you have exempt sales and your taxable purchases exceed £85,000,

  • If you take over a VAT-registered business, you must obtain a VAT number by registering for VAT within 30 days.

What taxes is my company obligated to pay in the United Kingdom?

In the United Kingdom, the types of taxes that apply to companies are Corporation Tax, Income Tax, Value-Added Tax (VAT) and Dividend Tax. These tax types vary depending on conditions and requirements, and the reporting obligations are different.

  1. Corporation Tax
    Corporation Tax is a tax type that companies actively trading in the United Kingdom must pay on their net profit at the end of the financial year. The current tax rate is 19%.

  2. Income Tax
    If you do not have a presence in the United Kingdom for more than 180 days, you are exempt from income tax. You may be subject to income tax in the country where you reside. Consult with your accountant for details on income tax in your country of residence.

  3. Value-Added Tax (VAT)
    If your company's turnover does not exceed £85,000 annually or within a month, you do not need a VAT number and you do not have to pay VAT. However, if you have a VAT number, you must reflect VAT on your invoice according to the invoice content. The current VAT rate is 20%; reduced VAT rate of 5% applies to certain areas such as books, certain food items, children's clothing, and transportation services.

  4. Dividend Tax
    If you do not reside in the United Kingdom for more than 180 days, you are exempt from paying dividend tax. However, you may be subject to dividend tax in the country where you reside. Consult with your financial advisor for details on dividend tax in your country.

What is a UTR number in England? How can it be obtained?

UTR (Unique Taxpayer Reference) is a unique number that is required for all taxpayers in England. This number allows individuals to complete their own tax assessments. UTR numbers are personal and are needed for all tax returns.

A UTR is issued by HM Revenue and Customs (HMRC) and can be obtained by registering for Self Assessment with HMRC or by contacting them if you are already registered for self assessment.

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