VAT registration is one of the first compliance points a growing UK business hits. Register late and HMRC can charge the VAT you should have collected, plus penalties.
When you must register
- Rolling 12-month test: register if your VAT-taxable turnover for the last 12 months goes over £90,000. Check this at the end of every month, not just at your year-end.
- Forward-looking test: register straight away if you expect turnover to go over £90,000 in the next 30 days alone.
- Deadline: register within 30 days of the end of the month you went over. Your effective date is the first day of the second month.
You can ask to deregister if taxable turnover falls below £88,000.
Should you register voluntarily?
Registering below the threshold lets you reclaim VAT on costs and can make a small business look established. It suits businesses selling to other VAT-registered businesses. It usually does not suit businesses selling to consumers, because your prices effectively rise by 20%.
VAT schemes worth knowing
- Flat Rate Scheme: pay a fixed percentage of gross turnover, set by your trade. Simple, but rarely worth it for businesses with few costs because of the 16.5% limited cost trader rate.
- Cash Accounting: account for VAT when you are paid and when you pay, not when you invoice. Helpful for cash flow if customers pay slowly.
- Annual Accounting: one return a year with interim payments.
Making Tax Digital
All VAT-registered businesses must keep digital records and file VAT returns through MTD-compatible software.
How we help
We monitor your rolling turnover each month, register you on time, keep MTD-compatible records and prepare VAT returns for your review. Check your position with our UK VAT registration checker, or see our bookkeeping and VAT support.
