VAT for cleaning businesses.

When you must register

You must register for VAT when your taxable turnover for the last 12 months goes over £90,000. This is a rolling 12 months, not your tax year, so check it every month.

You then have 30 days from the end of that month to register, and you charge VAT from the first day of the second month. GOV.UK's example: go over on 15 July, register by 30 August, charge VAT from 1 September.

You must also register if you expect to go over £90,000 in the next 30 days alone, for example when you win a big office contract. GOV.UK: Register for VAT

Should you register before you have to?

You can register voluntarily. Whether it helps depends on who your customers are:

• Homeowners can't reclaim VAT, so adding 20% makes you dearer than a cleaner who isn't registered. Most domestic cleaning firms stay under the threshold as long as they can.
• Offices, letting agents and VAT-registered businesses usually reclaim the VAT, so registering costs them nothing and lets you reclaim VAT on your van, supplies and equipment.

The Flat Rate Scheme

With the Flat Rate Scheme you charge customers 20% as normal, but pay HMRC a fixed percentage of your VAT-inclusive turnover instead of working out VAT on every cost. You can join if your VAT turnover is £150,000 or less.

• Cleaning has no category of its own. "Business services not listed elsewhere" is 12%.
• If you spend very little on goods, you count as a limited cost trader and pay 16.5%. Many cleaning companies are mostly labour, so check this before you join.
• In your first year of VAT registration you get a 1% discount.

GOV.UK: Flat Rate Scheme rates · eligibility

What a VAT invoice must show

Once you're registered, a full VAT invoice needs, among other things:

1. A unique invoice number in sequence
2. The time of supply (the date of the clean) and the date of issue
3. Your name, address and VAT registration number
4. The customer's name and address
5. A description of the cleans and how much of each
6. The VAT rate, the amount excluding VAT, and the total VAT in pounds

For a supply of £250 or less you can give a simplified invoice. GOV.UK: VAT Notice 700/21

Never delete an invoice

If you overcharge or a customer gets a refund, issue a credit note against the original invoice. Deleting or editing an issued invoice breaks the number sequence, and HMRC expects to see every number.

How Spick HQ helps

Spick HQ turns each finished clean into a numbered invoice with VAT worked out, inside the price or added on top. Refunds become credit notes. The VAT return figures come from the same ledger, ready for you or your accountant to file. Invoices and accounts in Spick HQ.

This guide is general information, not tax advice. Rules change, so check GOV.UK or ask your accountant before you decide.