Your turnover's creeping up, and someone mentioned VAT registration. Do you need to register? What does it mean? Will it kill your profit margins? Here's everything UK mobile vendors need to know about VAT—in plain English.
The VAT Registration Threshold
As of April 2024, you must register for VAT if your VAT taxable turnover exceeds £90,000 in any rolling 12-month period. This isn't your profit—it's your total sales.
There are two triggers:
- Historical: Your taxable turnover in the last 12 months exceeded £90,000
- Future: You expect to exceed £90,000 in the next 30 days alone
If you hit either trigger, you must register within 30 days. Miss this deadline and you'll owe VAT from when you should have registered—plus potential penalties.
What "Taxable Turnover" Actually Means
For most mobile vendors, taxable turnover is simply your total sales. Food sold from a food truck is standard-rated (20% VAT), as is catering at events. Mobile bar services? Standard-rated too.
A few things that confuse people:
- Cold takeaway food from a permanent premises is zero-rated, but hot food or food served at events is standard-rated
- Catering services are always standard-rated, even if some items would be zero-rated in a shop
- Tips and gratuities don't count towards your turnover if they go directly to staff
When in doubt, assume it's taxable. You can always check with HMRC or an accountant.
Pro Tip
Keep a rolling 12-month total of your sales updated monthly. When you hit £80,000, start preparing for registration. You don't want to scramble when you cross £90,000.
What Happens When You Register
Once registered, you must:
- Charge VAT on sales: Add 20% to your prices (or absorb it from your margins)
- Submit VAT returns: Usually quarterly, showing VAT collected and VAT paid
- Pay the difference: If you collected more VAT than you paid, you owe HMRC the difference
- Keep detailed records: VAT invoices, receipts, and calculations
- Use Making Tax Digital: File returns through compatible software
The Pricing Dilemma
This is the big question: do you add 20% to your prices or absorb VAT from your existing prices?
Option 1: Add VAT to Prices
If you charge £15 per head now, you'd charge £18 (£15 + £3 VAT). Your margin stays the same, but you're now 20% more expensive than non-registered competitors.
Option 2: Absorb VAT
Keep charging £15, but £2.50 of that is now VAT. Your effective price drops to £12.50. Your margin shrinks, but you stay competitive.
Option 3: Split the Difference
Raise prices by 10% to £16.50. You absorb some VAT, pass some on. Most vendors find this approach works best—it's a price increase, but not a shocking one.
The right answer depends on your market. If you're already at premium prices, adding 20% might price you out. If you're mid-market with room to grow, it might be time to raise prices anyway.
The Good News: You Can Claim VAT Back
Registration isn't all bad. You can reclaim VAT on business purchases:
- Equipment: That £6,000 generator? Claim back £1,000 VAT
- Vehicle costs: Fuel, repairs, parts (but not the vehicle itself if also used personally)
- Supplies: Stock from VAT-registered suppliers
- Professional services: Accountant fees, software subscriptions
- Marketing: Website design, printing, advertising
If you buy a lot of equipment or your supplies come from VAT-registered wholesalers, the VAT you reclaim can significantly offset what you owe.
Should You Register Voluntarily?
You can register even if your turnover is below £90,000. This makes sense if:
- Most clients are VAT-registered: They can reclaim the VAT you charge, so it doesn't cost them extra
- You have large upfront costs: Buying a truck? Equipment? Reclaim that VAT now
- You want to look bigger: Some corporate clients only work with VAT-registered suppliers
- You're close to the threshold anyway: Get systems in place before you're forced to
However, if you sell mainly to individuals (weddings, private parties), voluntary registration just makes you more expensive with no benefit to the client.
The Flat Rate Scheme
If your VAT-inclusive turnover is under £150,000, you might qualify for the Flat Rate Scheme. Instead of tracking VAT on every purchase, you pay a fixed percentage of your gross turnover.
For catering services, the flat rate is typically 12.5%. You charge clients 20% VAT but only pay HMRC 12.5%, keeping the difference. The trade-off? You can't reclaim VAT on purchases (except capital assets over £2,000).
The Flat Rate Scheme is simpler but not always cheaper. Do the maths for your specific situation.
Track your turnover automatically
VendorPad monitors your rolling 12-month turnover and alerts you when you're approaching the VAT threshold. No spreadsheet calculations, no nasty surprises.
Get Early AccessVAT Return Deadlines
Most VAT-registered businesses file quarterly. Your return and payment are due one month and seven days after the quarter ends:
| Quarter Ends | Return & Payment Due |
|---|---|
| 31 March | 7 May |
| 30 June | 7 August |
| 30 September | 7 November |
| 31 December | 7 February |
Set up direct debit and you get an extra 3 days—payment is taken automatically on the 12th.
Common VAT Mistakes
Avoid these pitfalls:
- Registering late: You owe VAT from when you should have registered, not when you actually did
- Forgetting to charge VAT: Once registered, you must charge it—you can't just absorb it
- Claiming VAT without valid invoices: You need proper VAT invoices, not just receipts
- Mixing up inclusive and exclusive prices: Be clear whether your quotes include VAT
- Missing the MTD requirement: You must file through compatible software, not manually
Final Thoughts
VAT registration is a milestone, not a disaster. Yes, it adds admin and complexity. But it also means your business is growing past £90,000 turnover—that's something to celebrate.
The key is preparation. Track your turnover monthly, understand your options, and get systems in place before you're forced to. When registration day comes, you'll be ready.
