Summary
UK businesses with taxable turnover exceeding £90,000 in any 12-month rolling period must register for VAT. Registration can also be done voluntarily below this threshold.
The VAT Registration Threshold
As of April 2024, the VAT registration threshold is £90,000 in any rolling 12-month period. This is not a calendar year — it applies to any 12 consecutive months.
You must register for VAT within 30 days of the end of the month in which you exceeded the threshold. HMRC will backdate VAT liability to the date you should have registered — not the date you actually did — so acting quickly is essential.
Example
If your turnover from May 2025 to April 2026 exceeded £90,000, you must register by 31 May 2026.
Should You Register Voluntarily?
You can register for VAT even if your turnover is below £90,000. Voluntary registration can be beneficial if:
- →Your customers are VAT-registered businessesThey can reclaim VAT so your prices remain competitive, and you can reclaim VAT on your purchases.
- →You make significant purchasesReclaiming VAT on equipment, materials, or professional services reduces your costs.
- →You want to appear more establishedA VAT number can signal professionalism to larger clients.
Note: Voluntary registration also adds compliance obligations and may deter price-sensitive consumer (B2C) customers who can't reclaim VAT.
Step-by-Step: How to Register
Create a HMRC Online Account
If you don't already have a Government Gateway account, create one at gov.uk.
Gather the information you'll need
Business name and address, nature of the business, bank account details, turnover figures for the past 12 months, National Insurance number (sole traders) or UTR number, company registration number (limited companies).
Complete the VAT registration form (VAT1)
Submit online via your HMRC account. Confirm why you're registering, your expected taxable turnover for the next 12 months, whether you trade with EU countries, and your chosen VAT scheme.
Receive your VAT registration number
HMRC typically issues a VAT registration number within 5 business days for online applications (paper applications can take 30+ days).
Start charging VAT
From your effective registration date, add the correct VAT rate to your invoices: Standard rate 20% (most goods/services), Reduced rate 5% (energy, children's car seats), Zero rate 0% (food, books, children's clothing).
Choosing the Right VAT Scheme
| Scheme | Best for | How it works |
|---|---|---|
| Standard VAT | Most businesses | Charge VAT on sales, reclaim on purchases, submit quarterly returns |
| Flat Rate Scheme | Small businesses (turnover under £150K excl. VAT) | Pay a fixed percentage of gross turnover to HMRC; simpler admin but can't reclaim VAT separately |
| Cash Accounting | Businesses with slow-paying clients | Pay VAT when customers pay you (not when invoiced) |
| Annual Accounting | Businesses wanting fewer returns | Submit one return per year; make advance payments monthly or quarterly |
Important: The right scheme depends on your margins, customer mix, and cash flow. Getting this wrong can be costly. We strongly recommend taking advice before registering.
Making Tax Digital (MTD) for VAT
All VAT-registered businesses must use Making Tax Digital (MTD) compliant software to:
- →Keep digital VAT records
- →Submit VAT returns directly to HMRC via compatible software
Approved software includes Xero, QuickBooks, Sage, and FreeAgent. You cannot submit a VAT return by logging into the HMRC website manually.
If you're not already using MTD-compatible software, this is something to set up before or at the point of registration.
What Happens If You Register Late?
Failing to register on time is treated as a compliance failure by HMRC. Penalties include:
- !A percentage of the VAT due from the date you should have registered
- !Interest on late payments
- !In serious cases, criminal investigation for deliberate non-compliance
HMRC can also issue assessments for the VAT you should have collected but didn't — even if you haven't charged it to customers.