Do You Need to Register for VAT?
You must register for VAT if your taxable turnover goes over £90,000 in any rolling 12-month period. This rule applies whether you operate as a sole trader, a partnership, or through a limited company. If your business is based outside the UK but supplies goods or services to UK customers, registration is still required, regardless of your turnover. You must also register if you expect your turnover to exceed £90,000 within the next 30 days. Use your bookkeeping software or records to monitor your monthly turnover.
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Understanding Taxable Turnover
Taxable turnover includes most of the goods and services you sell in the course of business. This includes standard-rated, reduced-rate, and zero-rated supplies. You should exclude any sales that are VAT exempt or outside the scope of VAT.
What to Include in Your Turnover
You must include income from hired or loaned goods, personal use of business goods, and bartered or part-exchanged items. You should also include gifts given to customers, reverse charge services received from overseas, and goods and services under the domestic reverse charge. Building work valued over £100,000 that you do yourself also counts towards your turnover. Add these amounts monthly to monitor if you cross the registration threshold.
VAT Registration Deadlines
If your taxable turnover exceeds £90,000, you must register within 30 days of the end of the month in which you went over the limit. Your VAT registration will take effect from the first day of the second month following that threshold breach. Failing to register on time could mean backdated VAT and penalties from HMRC.
Example: Rolling 12-Month Turnover
Bella is a sole trader. On 7 July 2025, her VAT taxable turnover over the last 12 months exceeds £90,000. Bella must register for VAT by 30 August 2025. Her VAT registration becomes effective from 1 September 2025.
Example: 30-Day Future Forecast
Cameron signs a contract on 17 July 2025 to supply goods worth £102,000. He must register for VAT by 16 August 2025. His VAT registration date is 17 July 2025, and he must charge VAT on those goods.
Late Registration and Penalties
If you register late, you will still owe VAT from the date you should have registered. This VAT will come out of your profits unless you collect it retrospectively. HMRC may also charge interest and penalties. If your turnover temporarily exceeds the threshold, you can apply for an exception from registration.
How to Register for VAT
You can register for VAT online through your Government Gateway account. Visit gov.uk/register-for-vat to start the process. The information you need will depend on your business structure.
Required Information
For sole traders and partnerships, you need your National Insurance number, a photo ID (like a passport), your bank account details, your Unique Taxpayer Reference (UTR), and estimates of your turnover. For limited companies, you’ll need your company registration number, bank details, UTR, and the same turnover details.
When to Register by Post
You must register by post if you’re applying for certain VAT schemes. This includes the Agricultural Flat Rate Scheme.
Voluntary VAT Registration
You can choose to register for VAT voluntarily, even if your turnover is below £90,000. When you do this, you must charge VAT on your sales but can reclaim VAT on your business expenses. This can be beneficial in many cases.
When Voluntary Registration Makes Sense
Voluntary registration makes sense if you sell zero-rated goods but incur VAT on purchases. It also helps boost your credibility with customers and suppliers. Preparing early can also make your business MTD-compliant and ready for growth.
Summary and Final Thoughts
Check your turnover every month to avoid being caught out. Register on time to avoid VAT penalties and unexpected tax bills. Know what counts towards taxable turnover and what doesn’t. Consider whether voluntary registration could benefit your business. Keep detailed records and use digital tools to simplify compliance.
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