Registering For VAT
VAT (Value Added Tax) is a tax on most goods and services sold in the UK. Once your business turnover exceeds the VAT threshold — currently £90,000 in any rolling 12-month period — you must register. This pathway explains when and how to register, what your obligations are once you are registered, and how to manage VAT without it becoming a burden.
You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period. This is not your profit — it is your total sales revenue. You must register within 30 days of the end of the month in which you crossed the threshold.
Taxable turnover includes most goods and services sold in the UK. Some things are exempt from VAT (such as most financial services, insurance and education) or zero-rated (such as most food, children's clothing and books). If your sales are mainly exempt, you may not need to register even if your turnover is above the threshold.
You can also register voluntarily if your turnover is below the threshold. This makes sense if your customers are mainly VAT-registered businesses (they can reclaim the VAT you charge, so it does not cost them anything) or if you have significant VAT on your purchases that you want to reclaim.
Monitor your rolling 12-month turnover carefully. Add up your sales for the last 12 months at the end of each month. If you are approaching the threshold, plan ahead — you need to register before you cross it, not after.
Good to know
- Set up a simple spreadsheet to track your rolling 12-month turnover
- If you are close to the threshold, speak to an accountant about whether voluntary registration makes sense
- Remember: the threshold is based on taxable turnover, not profit
Watch out for
- Crossing the threshold without realising it — HMRC will backdate your registration and you will owe VAT on past sales
- Confusing turnover with profit when assessing whether you need to register
- Assuming that because you have not received a letter from HMRC, you do not need to register
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