After the new Amazon VAT update, I’m not VAT registered. What do you guys suggest?
Should I register for VAT to get returns, or just wait until I hit the threshold? Amazon is taking a huge chunk of money from the referral fee.
The FBA fee is manageable, but the referral fee is really hurting.
The decision is something that only you (or your accountant) can make by using your purchasing and sales figures to determine whether being vat-registered is beneficial to you.
Your buying costs will be less but your selling costs will need to be slightly higher to maintain your margin. It could mean that you become uncompetitive but it could also mean that your items become more attractive to vat-registered buyers.
I registered for vat voluntarily when I first started and do not buy from a seller who is not registered unless their price beats the vax-exclusive price of a vat-registered seller.
Given the recent VAT changes, if the referral fees are significantly impacting your margins and you’re not yet VAT registered, it might be worth considering registration. This way, you can reclaim VAT on your business expenses. However, if you’re well below the VAT threshold, it might be more cost-effective to wait and reassess when you approach the threshold. In the meantime, adjusting your pricing strategy could help mitigate the impact.
If Amazon’s VAT updates are significantly affecting your margins, it might be beneficial to register for VAT now to reclaim VAT on your business expenses. However, if you’re far from the VAT threshold, you might prefer to wait. Assess your current sales volume and projected growth to make an informed decision.
Still better than getting vat registered… wait for £90,000
All non-VAT registered sellers are in the same position. This should now level the playing field. Put your prices up.
Being non-VAT registered is always more profitable than being VAT registered.
I am already selling at higher price because I realize that in the first months as a seller if we sell less, it means we are not making profit.