How to Register for VAT in the UK

The VAT registration threshold

Registration is compulsory once your taxable turnover passes the VAT registration threshold over any rolling twelve-month period. Taxable turnover includes everything subject to VAT at any rate, standard, reduced and zero-rated, but excludes exempt supplies.

Two tests apply. The historical test looks back: if at the end of any month your taxable turnover for the previous twelve months has passed the threshold, you must register within thirty days and your effective date is the first day of the second month after you crossed it. The forward-look test applies if you expect to pass the threshold in the next thirty days alone, in which case you register immediately with effect from the start of that period. Taking over a VAT-registered business as a going concern brings the previous owner's turnover into the calculation.

Voluntary registration below the threshold lets you reclaim VAT on purchases and startup costs, looks more established to B2B clients who can reclaim what you charge them, opens up the Flat Rate and Cash Accounting schemes, and can be backdated. The drawbacks are having to charge VAT on all taxable sales, higher effective prices for consumers, quarterly returns, MTD-compatible software and extra record keeping.

Types of VAT registration

Compulsory registration applies once you cross the threshold or expect to. Registering late means HMRC treats you as owing VAT from the date you should have registered, which can arrive as a substantial unexpected bill.

Voluntary registration is a choice below the threshold, common for businesses selling mainly to other VAT-registered businesses. Distance selling rules can require registration for businesses based outside the UK selling goods or digital services to UK consumers, with different treatment for low-value consignments and for goods above that value where import VAT applies at the border instead.

Intending trader registration lets a business that has not yet started making taxable supplies register anyway, so it can reclaim VAT on startup costs. HMRC requires evidence of genuine intent, such as a business plan, purchase orders, contracts or premises, and can cancel the registration if trading does not begin within a reasonable time.

How to register online

The guide sets out six steps. Create a Government Gateway account if you do not already have one, or reuse the credentials you use for Self Assessment. Gather your National Insurance number, business details, bank account details for refunds, estimated taxable turnover, a description of your activities and the relevant date.

Complete the online VAT registration form, which asks about your business structure, activities by SIC code, turnover and contact details, and takes fifteen to thirty minutes with everything to hand. Choose your VAT accounting scheme: Standard is the default, with Flat Rate, Cash Accounting and Annual Accounting available subject to turnover limits, and you can change scheme later.

Set your effective date of registration. For compulsory registration HMRC sets it; for voluntary registration you choose, and you can backdate up to four years to reclaim input VAT on eligible earlier purchases. Finally, HMRC issues your VAT registration certificate confirming your VAT number, effective date, first return due date and scheme. You must charge VAT from your effective date even before the certificate arrives. Paper registration on form VAT1 is possible but slower, and an accountant can register on your behalf through their Agent Services Account.

Choosing your VAT scheme

Standard Accounting is the default: charge VAT on sales, reclaim input VAT on purchases, pay HMRC the difference each quarter. It has no turnover restriction and gives the fullest recovery, at the cost of detailed record keeping and VAT falling due on the invoice date rather than the payment date.

The Flat Rate Scheme pays HMRC a fixed percentage of gross turnover set by sector while you still charge clients the standard rate. It simplifies bookkeeping and offers a discount in the first year of registration, but blocks input VAT recovery on most purchases, applies a single higher rate to limited cost traders, and has a turnover ceiling at which you must leave.

Cash Accounting shifts VAT to when payments are made and received, helping cash flow and giving automatic bad debt relief. Annual Accounting replaces four returns with one plus interim payments. Both are limited by turnover. The page lists common Flat Rate sector percentages, and points to the Flat Rate Scheme guide for detail.

What happens after registration

Your VAT number, in the GB format, must appear on VAT invoices, your website and business stationery, and can be verified by clients and suppliers through HMRC's online VAT checker. You must charge VAT at the correct rate from your effective date, and your invoices must show your VAT number, the rate applied, the net amount, the VAT amount and the gross total, with simplified rules for low-value invoices.

Most registered businesses file quarterly, one calendar month and seven days after the end of each VAT quarter. All VAT-registered businesses must keep digital records and file through MTD-compatible software with a digital link from records to return; the HMRC portal is not a filing route. The page states that Taxmo is fully MTD-compliant and handles this.

You can reclaim input tax on goods and services bought for the business, but only where you hold a valid VAT invoice. Pre-registration VAT can be reclaimed on goods still on hand bought up to four years before registration and on services received in the six months before it. Some categories, such as business entertainment, carry restrictions on recovery.

Common mistakes and deregistering

The mistakes the guide flags are: not monitoring rolling twelve-month turnover at the end of every month, which leads to backdated liability; choosing the wrong scheme for your expense profile; setting the wrong effective date and either losing historical input VAT or charging clients earlier than necessary; not updating invoices immediately, which leaves you paying the VAT yourself; forgetting to set up MTD-compatible software before the first return is due; and mixing taxable and exempt supplies without applying partial exemption correctly.

You can deregister if your taxable turnover falls below the deregistration threshold and you do not expect to cross the registration threshold in the next twelve months, or if you stop making taxable supplies at all. Other triggers include closing or selling the business, changing what the business does, changing structure, or deciding that a voluntary registration is no longer worth it.

Deregistration is done online through your Government Gateway account or by post on form VAT7. HMRC confirms the effective date, you file a final return up to that date, and you may have to account for VAT on business assets you still hold if their value exceeds the set limit. Once deregistered you can no longer charge VAT or reclaim input VAT, and if turnover rises above the registration threshold again you must re-register.

Common questions