Why is VAT charged on websites?

While we’re full of admiration for the sterling work the HMRC does, we’ve got a small bone to pick with them. What are we talking about? VAT on websites.

Since time began, certain business items like brochures, catalogues, flyers and leaflets have been exempt from VAT, presumably because these were classed as “business essentials”.

Surely a website is a “business essential”?

However, fast forward to the 21^st century and there exists another business essential, the humble website. Yet unlike the printed “essentials” mentioned above, websites accrue VAT, and this seems just wrong. Not for VAT-rated companies of course, they don’t care, but the small, non-VAT registered companies out there, such as new start-ups and sole traders.

Making life harder for start-ups and sole traders

Many start-ups and sole traders are not VAT-registered, particularly those that supply consumers rather than B2B. It’s difficult enough when you’re starting out, working from the spare room, without having things made 20% more expensive through VAT

We recently had a little dig at tedious email footers and dated Companies House regulations, seemingly written before the digital age, and maybe HMRC should bring their thinking on VAT up to date too?

Start-ups and sole traders deserve more support

Removing VAT on websites would be a massive help to new start-ups and sole traders. It might also help them to afford the services of a professional website design company, rather than having to go down the DIY or cheap-and-cheerful route afforded by the likes of Wix, Squarespace and Yell.com, giving their business a much greater chance of success.

We have helped many new and small businesses over the years (we were one, once) and have witnessed first-hand the difference a professional online presence can make.