VAT registration

Once HMRC have accepted your VAT registration you will need to:

Charge the correct rate and amount of VAT to your customers;
Pay any VAT due to HMRC;
Submit quarterly VAT returns; and
Keep proper accounting records.

What is the UK VAT registration threshold?

The VAT registration threshold from 1 April 2024 is £90,000 of UK taxable turnover in either the past rolling 12 months (to the end of a given calendar month) or in the next 30-day period alone. UK taxable turnover means sales that are subject to either the standard rate of UK VAT at 20%, the reduced rate of UK VAT at 5% or the zero rate of UK VAT. UK taxable turnover means taxable sales with a UK place of supply. Income that is exempt from UK VAT or has a non-UK place of supply does not count towards the VAT registration threshold.

When should I apply for VAT registration?

You are required to notify HMRC of your obligation to register within 30 days of the date you exceeded the VAT registration threshold.

If you exceeded the VAT threshold on the basis of historic sales (12-month look-back basis) your date of registration will be 1 month and 1 day after the month-end you exceeded the threshold. For example if, in the 12 months to 31st August, your UK taxable sales exceeded £90,000, you must notify HMRC by 30 September, and your effective date of registration will be 1st October. HMRC may, upon request, allow you to avoid registering if you will be making mainly zero-rated sales (exemption from registration) or, by concession, if you are only temporarily over the VAT registration threshold (exception).

If you think your UK taxable turnover will be more than £90,000 in the next 30-day period alone (look-forward basis) then you must notify HMRC of this within 30 days and you will be VAT registered from the date this expectation arose. For example if, on 12th March, you take an order for £90,000 of UK-held goods, to be delivered in 3 weeks’ time, you must notify HMRC by 11th April, and your effective date of registration will be 12th March. Exception from registration is not available for look-forward registrations.

VAT penalty

You may face a penalty if you notify your requirement to register late and HMRC will back-date the registration to when you went over the threshold. This means you will owe HMRC any VAT on your income between being required to be registered and HMRC actually registering you. For VAT advice on VAT penalties.

How do I apply for VAT registration?

You should register for VAT online with HMRC. You will get a VAT online account which you need to submit your VAT returns to HMRC. There are some circumstances where you may need to register by post on a form VAT1. You will need to have ve information about your turnover, business activities and bank details to hand when you complete your application. You will also need:

Register a limited company

your company registration number
your business’s bank account details
your Unique Taxpayer Reference (UTR)
details of your annual turnover

You will also need information about:

your Self Assessment
your Corporation Tax
Pay As You Earn (PAYE)

Register as an individual or as a partnership

your National Insurance number
an identity document, like a passport or driving licence
your bank account details
your Unique Taxpayer Reference (UTR), if you have one
details of your annual turnover

You will also need information about:

your Self Assessment return
payslips
P60.

What happens next?

You should get a VAT registration certificate within 30 working days to your VAT online account unless HMRC is experiencing delays.

Your registration date is your ‘effective date of registration’, so you will have to pay HMRC any VAT due on sales income from this date.

My turnover is under £90,000. Should I register voluntarily?

An advantage of being VAT registered voluntarily is that, to the extent your purchases relate to taxable income-generating activities, you can recover the UK VAT on costs incurred from HMRC, meaning only the net purchase amount is a cost to your business. The downside of course is that any VAT in your income is payable to HMRC. Businesses that make mainly zero-rated or outside-the-scope-of-UK-VAT sales of goods/services however may benefit from being VAT registered voluntarily. A business might also register early for commercial reasons, for example, some businesses will only trade with VAT registered businesses.

Being VAT registered below the threshold is optional, however, you must cancel your registration within 30 days if you’re no longer eligible. For example, if you stop trading, stop making (or intending to make) taxable supplies, or join a VAT group.

VAT deregistration

The VAT deregistration threshold is £88,000 or less and you can cancel online with HMRC. When you de-register, you may have to pay VAT to HMRC on stocks and assets the business still has on hand at the date of deregistration. More information about cancelling your registration. Seeking specific VAT advice may be useful.

Can I claim VAT back?

Wen you are VAT registered you may be able to claim VAT back on eligible purchases through your VAT return for that accounting period. You are not able to recover UK VAT on costs of any non-business activities and generally not on costs of VAT-exempt activities which are subject to the VAT partial exemption regulations. On your first VAT return you can also claim back VAT on certain costs incurred before you became VAT registered.

You need to keep records to support your claims, including valid VAT invoices. You’ll then report how much VAT you’ve paid and collected during the period in your VAT return.

Other points to note.

Once VAT registered, you will need to abide by the VAT record-keeping requirements, including Making Tax Digital for VAT.

Revenue is only recognised for VAT purposes if the tax point, known as the time of supply is triggered. This is not necessarily the time as when you would recognise the income for income tax or accounting purposes. Generally, for VAT purposes, the tax point of a supply is the earlier of receiving payment (including deposits) or completing/delivering the supply. Once VAT registered, issuing a VAT invoice can also trigger a tax point.

If you make reduced or standard rated supplies to another UK VAT registered customer, you must, generally, issue them a VAT invoice no later than 30 days after the tax point.

VAT simplification

There are a number of VAT administration schemes available to small businesses aimed at simplifying administrative requirements and/or cash flow. These are: the VAT annual accounting scheme; the VAT cash accounting scheme; the VAT flat rate scheme; and, the agricultural flat rate scheme for farmers. You may wish to seek specific VAT advice before seeking to use a scheme.

VAT advice

For Specialist VAT advice contact Solve VAT on 0161 883 2120.

VAT registration – information on how to apply