You must register for VAT when your taxable turnover exceeds £90,000 in any rolling 12-month period (threshold from 1 April 2024). There is also an immediate registration requirement if you expect your taxable turnover to exceed £90,000 in the next 30 days alone. You can choose to register voluntarily at any turnover level if you make (or intend to make) taxable supplies.

What counts as taxable turnover

Taxable turnover includes the total value of everything you sell that is not VAT-exempt. Specifically, it covers:

Standard-rated supplies (20%) -- most goods and services
Reduced-rate supplies (5%) -- domestic fuel, children's car seats
Zero-rated supplies (0%) -- most food, books, children's clothing, exports

Taxable turnover does not include:

VAT-exempt sales (insurance, education, certain health services, finance)
Sales of capital assets (equipment you are selling off)
Non-business income (dividends, interest, donations)

Use a rolling 12-month calculation: at the end of each month, add up your taxable turnover for the previous 12 months. If it exceeds £90,000, you must register.

VAT registration threshold and requirements

£90,000 turnover threshold triggering mandatory VAT registration and Making Tax Digital compliance

VAT registration becomes mandatory when your taxable turnover exceeds £90,000 in a rolling 12-month period (as of 1 April 2024). You can also register voluntarily below this threshold.

Mandatory threshold: £90,000 taxable turnover in rolling 12 months
Registration deadline: 30 days after exceeding threshold
Voluntary registration: Allowed at any turnover level
Deregistration threshold: £88,000 - can deregister if turnover falls below
Standard rate: 20% (most goods and services)
Reduced rate: 5% (domestic fuel, children's car seats, etc.)
Zero rate: 0% (most food, books, children's clothes, etc.)

What counts as 'taxable turnover':

Includes: Standard-rated, reduced-rated, and zero-rated sales
Excludes: VAT-exempt sales (insurance, finance, education, health), goods sold outside the UK
Calculate over rolling 12-month period - if last 12 months exceed £90,000, you must register
Future test: If you expect to exceed £90,000 in next 30 days alone, register immediately

Making Tax Digital (MTD) for VAT - mandatory for ALL VAT-registered businesses:

You must keep digital VAT records using MTD-compatible software
Submit VAT returns directly from the software via HMRC API
Applies to all VAT-registered businesses regardless of turnover (since April 2022)
Penalties for non-compliance: Points-based penalty system (4 points for quarterly, 5 for monthly, 2 for annual filers trigger penalties). Late filing penalties start from £200 per late submission after reaching penalty point threshold

Should you register voluntarily below £90,000?

Reasons TO register:

Reclaim VAT on business purchases and expenses (especially valuable for high capital expenditure)
Appear more established and professional to B2B customers
Necessary to trade with VAT-registered B2B customers who want VAT invoices

Reasons NOT to register:

Administrative burden of VAT returns, MTD software, and record-keeping
20% price increase if selling to consumers who can't reclaim VAT
Cash flow impact - you collect VAT from customers and pay it to HMRC before receiving payment if not using Cash Accounting scheme

VAT schemes for small businesses:

Flat Rate Scheme: Pay flat percentage (6.5%-14.5% depending on sector) of gross turnover instead of tracking input VAT. Available when joining VAT if turnover under £150,000. You must leave the scheme if turnover exceeds £230,000 (including VAT).
Cash Accounting: Pay VAT when customers pay you, not when you invoice. Join if turnover under £1.35 million, leave if exceeds £1.6 million.
Annual Accounting: File one VAT return per year instead of four, make advance payments. Join if turnover under £1.35 million, leave if exceeds £1.6 million.

Penalties for late registration:

You must pay VAT due from when you should have registered, even if you didn't charge customers
Late registration penalty: Percentage of VAT due for period of non-registration based on behaviour: Non-deliberate 0-30%, Deliberate 20-70%, Deliberate and concealed 30-100%. Minimum penalty £50
Criminal prosecution possible for deliberate failure to register

Deregistration: If your turnover falls below £88,000 (deregistration threshold), you can choose to deregister. You must deregister if you stop making taxable supplies altogether.

Official source: gov.uk/vat-registration-thresholds

Registration timing and deadlines

You must notify HMRC within 30 days of the end of the month in which you exceeded the threshold. Your effective registration date is the first day of the second month after you went over (the "historic test"). For example, if your rolling 12-month turnover exceeded £90,000 at the end of June, you must notify HMRC by 30 July and your registration takes effect from 1 August.

If you expect to exceed £90,000 in the next 30 days alone (the "future test"), you must register immediately and the effective date is the beginning of that 30-day period.

HMRC typically processes registrations within 30 working days, though it can be faster. You should start charging VAT from your effective registration date even if you have not yet received your VAT number -- issue invoices showing "VAT registration applied for" and adjust once you receive your number.

1. Check whether you must register

Calculate your taxable turnover for the last 12 months. If it exceeds £90,000, or you expect it to exceed £90,000 in the next 30 days, you must register.
2. Gather required information

You will need your company UTR or National Insurance number, business address, bank account details, expected turnover, the nature of your business activities, and your chosen effective registration date.
3. Register online with HMRC

Go to gov.uk/register-for-vat and complete the online form. You can register as an individual, partnership, company, or group. Choose your preferred VAT accounting scheme (standard, flat rate, cash accounting, or annual accounting).
4. Receive your VAT registration certificate

HMRC will send your VAT registration number and certificate, usually within 30 working days. Your certificate confirms your effective date and VAT period dates.
5. Set up Making Tax Digital

Choose MTD-compatible software, set up digital record-keeping, and connect your software to HMRC. MTD for VAT is mandatory for all VAT-registered businesses since April 2022.
6. Start charging and recording VAT

Issue VAT invoices from your effective registration date. Begin recording output VAT on sales and input VAT on purchases. Submit your first VAT return by one month and seven days after the end of your first VAT period.

VAT registration: when and how to register

VAT registration thresholds, deadlines, and process for 2025/26.

VAT registration is required if taxable turnover exceeds £90,000 in any 12-month rolling period. Registration is also available voluntarily if turnover is below this threshold.

VAT registration threshold: £90,000 per year (from 1 April 2024)
Deregistration threshold: £88,000 per year
Registration deadline: Within 30 days of exceeding threshold
Penalty for late registration: Penalties and interest on VAT that should have been collected

Calculating taxable turnover

Count sales of VAT-taxable goods and services (standard, reduced, or zero-rated). Do not count:

VAT-exempt sales (insurance, education, health services)
Sales of capital assets (equipment you're selling)
Non-business income

Use a rolling 12-month calculation: At the end of each month, look back over the previous 12 months. If total taxable turnover exceeds £90,000, you must register.

Voluntary registration

VAT registration is available even if turnover is below £90,000. Benefits include:

Reclaim VAT on expenses Including startup costs (up to 4 years before registration)
Business credibility VAT registration can make businesses appear more established
Work with VAT-registered businesses They can reclaim VAT charged to them
Prepare for growth Get VAT processes in place before mandatory registration

Drawback VAT must be charged to customers, which may increase prices or reduce margins if absorbed.

Registration process

Register online via HMRC (gov.uk/register-for-vat)
Provide business information: Name, address, turnover, business activities, bank details
Choose VAT scheme (standard accounting, flat rate, cash accounting)
Receive VAT registration number within 30 working days
Start charging VAT from your effective registration date

Processing time: Usually within 30 working days
Effective date: Date you exceeded threshold, or date you choose (voluntary)
First VAT return due: By 1 month and 7 days after end of first VAT period (usually quarterly)

Voluntary registration

You can register for VAT voluntarily at any turnover level if you make (or intend to make) taxable supplies. This includes intending trader registration -- you can register before you start making taxable supplies if you can demonstrate a genuine intention to trade.

Benefits of voluntary registration

Reclaim input VAT on business purchases, including pre-registration claims (goods still held at registration up to 4 years back; services received within 6 months before registration)
Business credibility -- VAT registration signals an established, professional business, and some larger clients require VAT-registered suppliers
B2B advantage -- VAT-registered customers can reclaim the VAT you charge, so your prices are effectively the same to them
Prepare for growth -- get VAT processes in place before mandatory registration

Drawbacks of voluntary registration

Price impact for B2C -- consumers cannot reclaim VAT, so you must either charge 20% more or absorb VAT and reduce your margin by one-sixth
Administrative burden -- quarterly VAT returns, MTD-compatible software, VAT invoicing, and 6 years of record-keeping
Cash flow -- you must pay collected VAT to HMRC, even if your customer has not yet paid you (unless you use the Cash Accounting Scheme)

Who voluntary VAT registration suits

Business types that typically benefit from voluntary registration versus those who should avoid it.

Businesses that typically benefit from voluntary registration

B2B businesses: Customers can reclaim VAT, so no competitive disadvantage
Exporters: Exports are zero-rated, so no output VAT but can reclaim all input VAT (regular refunds)
High-expense businesses: Significant VAT on purchases (equipment, stock, professional fees)
Startup businesses: Can reclaim VAT on startup costs (pre-registration claims)
Businesses approaching threshold: Get systems in place before mandatory registration
Zero-rated suppliers: Children's clothing, books, food producers - no output VAT, but reclaim input VAT

Ideal for B2B: Customers reclaim VAT - no price disadvantage
Ideal for exporters: Zero-rated sales + full input VAT recovery = net refund
Ideal for high expenses: Input VAT recovery exceeds administrative costs
Ideal for startups: Pre-registration claims recover VAT on setup costs

Businesses that should consider carefully

B2C businesses below threshold: 20% price increase or margin reduction
Low-expense businesses: Limited input VAT to reclaim (service businesses with few purchases)
Exempt supply makers: Cannot register if only making exempt supplies; partial exemption complications if mixed
Cash-based businesses: Additional record-keeping burden
Businesses with tight margins: Compliance costs may outweigh benefits

B2C warning: Consumers cannot reclaim VAT - prices rise or margins fall
Low expenses warning: Input VAT recovery may not justify admin burden
Break-even calculation: Compare input VAT savings against compliance costs and margin impact

Special registration types

Group registration

Connected bodies corporate (companies under common control) can apply to register as a VAT group. The group is treated as a single taxable person, with one representative member submitting returns. The key advantage is that supplies between group members are disregarded for VAT -- no VAT is charged on intra-group transactions. However, all members are jointly and severally liable for the group's VAT debts.

Transfer of a going concern (TOGC)

If you are buying or selling a business (or part of one) as a going concern, the transfer can be VAT-free provided certain conditions are met: the assets are sold as part of a business, the buyer intends to carry on the same kind of business, and the buyer is (or becomes) VAT-registered. The buyer can apply to take over the seller's VAT registration number using form VAT68.

Deregistration

You can apply to voluntarily deregister if your taxable turnover has fallen below £88,000 (the deregistration threshold from April 2024) and you do not expect it to exceed £88,000 in the next 12 months. You must deregister if you stop making taxable supplies altogether. On deregistration, you may owe VAT on stock and assets still held if the total VAT would exceed £1,000.

Late registration penalties

If you fail to register on time, HMRC will assess you for the VAT you should have charged from the date you were required to register. You will owe this VAT even if you did not charge it to your customers. Additional penalties are calculated as a percentage of the VAT due during the period of non-registration:

Non-deliberate failure: 0% to 30% (depending on disclosure and cooperation)
Deliberate failure: 20% to 70%
Deliberate and concealed: 30% to 100%
Minimum penalty: £50

In serious cases, deliberate failure to register can lead to criminal prosecution.

Official VAT registration guidance on GOV.UK

Use these links to register for VAT and find compatible software.

Register for VAT
Online service to register for VAT with HMRC.
gov.uk
VAT registration thresholds
Current thresholds for mandatory and voluntary VAT registration.
gov.uk
Find MTD-compatible software
Search for software that works with Making Tax Digital for VAT.
gov.uk
VAT rates on different goods and services
Check which VAT rate applies to the goods and services you sell.
gov.uk
Group and divisional registration (VAT Notice 700/2)
How to register as a VAT group, division, or joint venture.
gov.uk
Transfer a business as a going concern (VAT Notice 700/9)
VAT-free business transfers and conditions for TOGC treatment.
gov.uk

Business Context Testing

Content Graph

Guvnor

VAT registration

What counts as taxable turnover

Registration timing and deadlines

1. Check whether you must register

2. Gather required information

3. Register online with HMRC

4. Receive your VAT registration certificate

5. Set up Making Tax Digital

6. Start charging and recording VAT

Voluntary registration

Benefits of voluntary registration

Drawbacks of voluntary registration

Special registration types

Group registration

Transfer of a going concern (TOGC)

Deregistration

Late registration penalties

Compliance Assistant

🧪 Business Context Testing

◉ Content Graph

What counts as taxable turnover

Registration timing and deadlines

1. Check whether you must register

2. Gather required information

3. Register online with HMRC

4. Receive your VAT registration certificate

5. Set up Making Tax Digital

6. Start charging and recording VAT

Voluntary registration

Benefits of voluntary registration

Drawbacks of voluntary registration

Special registration types

Group registration

Transfer of a going concern (TOGC)

Deregistration

Late registration penalties

Related guides in Tax & Finance

Business Context Testing

Content Graph