VAT (Value Added Tax) is a tax on goods and services. If your business turnover exceeds the VAT threshold, you must register. But even below the threshold, voluntary registration can sometimes save you money.
Current Threshold
You must register if taxable turnover exceeds £90,000 in any rolling 12-month period, or if you expect it to exceed £90,000 in the next 30 days alone.
Voluntary Registration
Worth considering if your customers are VAT-registered (B2B), you have significant input costs with VAT to reclaim, or you want to appear more established. Avoid if customers are mainly consumers — 20% added to prices hurts competitiveness.
VAT Schemes
- Flat Rate Scheme — pay a fixed percentage of turnover. Simpler but you cannot reclaim input VAT.
- Cash Accounting — account for VAT when you receive or make payments, not when invoices are issued.
- Annual Accounting — one return per year with interim payments.
How to Register
- Go to gov.uk/vat-registration
- Provide business details, bank account and turnover estimate
- Choose your VAT scheme
- Submit — registration takes 2-4 weeks
- Receive your VAT certificate and number
Making Tax Digital
All VAT-registered businesses must comply with MTD: digital records and returns via compatible software. Spreadsheets alone are no longer acceptable.
Deadlines and Penalties
Standard returns are quarterly. Due 1 month and 7 days after the VAT period ends. Late filing triggers surcharges of 2-15% of VAT owed. Use CalcPad to stay on top of VAT.