Do you need to register?
You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period (the threshold for 2025/26). You must also register if you expect to go over the threshold in the next 30 days alone.
"Taxable turnover" means the total value of everything you sell that is not VAT-exempt. This includes zero-rated goods (like most food and children's clothing) — they count toward the threshold even though the VAT rate is 0%.
Use the CalcPad VAT Calculator to check your numbers.
Voluntary registration
You can register for VAT even if your turnover is below the threshold. This makes sense if:
- Your customers are VAT-registered businesses — they can reclaim the VAT you charge, so it does not cost them more. And you can reclaim VAT on your business purchases.
- You have significant input VAT — if you buy equipment, materials or services with VAT, registration lets you claim it back.
- You want to appear larger/more established — being VAT-registered signals a certain level of turnover.
Voluntary registration is generally not a good idea if you sell to consumers (B2C), because you will have to add 20% to your prices and they cannot reclaim it.
How to register
- Go to gov.uk/vat-registration
- You need a Government Gateway account (create one if you do not have one)
- Provide your business details, bank account, and estimated turnover
- HMRC will issue your VAT registration certificate within 30 working days (often faster)
- Your VAT number will be a 9-digit number starting with GB
You must register within 30 days of the end of the month in which you exceeded the threshold. For example, if you hit £90,000 on 15 March, you must register by 30 April and start charging VAT from 1 May.
VAT rates
| Rate | Percentage | Applies to |
|---|---|---|
| Standard | 20% | Most goods and services |
| Reduced | 5% | Home energy, child car seats, sanitary products |
| Zero | 0% | Most food, children's clothing, books, newspapers |
| Exempt | N/A | Insurance, finance, education, health services |
VAT schemes
Flat Rate Scheme (FRS)
Instead of tracking VAT on every purchase, you pay a fixed percentage of your gross turnover (the percentage depends on your industry — typically 9.5% to 14.5%). You keep the difference between what you charge customers (20%) and what you pay HMRC. This simplifies bookkeeping significantly and can save money for businesses with low input VAT (service businesses especially).
However, since April 2017, "limited cost traders" (who spend less than 2% of turnover on goods) must use a flat rate of 16.5%, which removes most of the benefit.
Cash Accounting Scheme
Normally you owe VAT when you invoice, regardless of whether the customer has paid. With cash accounting, you only owe VAT when you actually receive payment. Available if your turnover is under £1.35 million. Excellent for businesses with slow-paying customers.
Annual Accounting Scheme
Instead of quarterly returns, you submit one annual return and make interim payments throughout the year. Available if turnover is under £1.35 million. Reduces admin but requires disciplined cash management.
Making Tax Digital (MTD)
Since April 2022, all VAT-registered businesses must keep digital records and submit returns through MTD-compatible software. You cannot submit VAT returns manually through the Government Gateway. Popular MTD software includes Xero, QuickBooks, FreeAgent and Sage.
Deregistration
You can deregister if your taxable turnover falls below £88,000 (the deregistration threshold). You must deregister if you stop making taxable supplies. Deregistration takes effect from the date you request it or a later date you specify.
Check any company's details on the register
Search Companies →