20 Oct 2025 2 min read VAT

VAT Registration in the UK: When You Must Register and How

Everything you need to know about VAT registration — the threshold, how to register, and your obligations once registered.

Value Added Tax is charged on most goods and services sold in the UK. If your business exceeds the VAT registration threshold, you are legally required to register with HMRC and charge VAT on your sales.

The Registration Threshold

For 2025/26 the threshold is £90,000 in VAT-taxable turnover in any rolling 12-month period — not your accounting year. You must also register if you expect to exceed £90,000 in the next 30 days alone. The deregistration threshold is £88,000.

Voluntary Registration

Registering voluntarily below the threshold makes sense if your customers are VAT-registered businesses (they reclaim VAT, so it costs them nothing extra) or if you make significant VAT-bearing purchases that you want to reclaim. It is less suitable if your customers are consumers who cannot reclaim VAT.

How to Register

Register online at gov.uk/register-for-vat. You will need your business details, UTR or Company Registration Number, bank account details, and the date turnover breached or will breach the threshold. HMRC typically takes around 30 working days to process registration.

VAT Rates

The standard rate is 20% on most goods and services. The reduced rate of 5% applies to domestic fuel and some energy-saving materials. The zero rate of 0% covers most food, children's clothing, and books. Exempt supplies — insurance, financial services, certain education — carry no VAT and you cannot reclaim input VAT on related purchases.

Making Tax Digital for VAT

All VAT-registered businesses must file returns using MTD-compatible software — you cannot file manually through your HMRC account. Compatible software includes Xero, QuickBooks, Sage, and FreeAgent.

Filing and Payment

VAT returns are typically quarterly, due one month and seven days after the period end. Late filing and payment attract penalties under the points-based system introduced in January 2023.

Reclaiming Input VAT

You can reclaim VAT on business purchases provided you hold a valid VAT invoice. Pre-registration VAT can be reclaimed: up to 4 years on goods still on hand and 6 months on services.

VAT Schemes

The Flat Rate Scheme lets you pay a fixed percentage of gross (VAT-inclusive) turnover to HMRC rather than tracking every transaction — available if turnover is below £150,000. The Annual Accounting Scheme reduces admin to one return per year. The Cash Accounting Scheme lets you account for VAT on payment rather than invoice, aiding cash flow — available if turnover is below £1.35m.

Penalties for Non-Registration

Failing to register when required can result in a penalty of up to 15% of VAT owed, plus the backdated VAT itself and interest. Monitor your rolling 12-month turnover monthly against the threshold.