When You Should Register for VAT (and How to Do It) in 2025

Jul 27, 2025

Main Topics & Discussion

VAT Registration Triggers

  • You must register when taxable turnover exceeds £90,000 in any rolling 12-month period.
  • Also required if you expect turnover to exceed £90,000 in the next 30 days.
  • Applies to sole traders, partnerships, CICs, and limited companies—even overseas businesses selling to UK customers.

What Counts as Taxable Turnover?

  • Includes standard-rated, reduced-rated, and zero-rated supplies.
  • Also counts: free gifts, goods you use personally, barter services, reverse-charge services (like Google Ads), and certain construction work.
  • Excludes exempt or outside-the-scope items like insurance or genuine donations.

Deadlines and Late Registration Penalties

  • Notify HMRC within 30 days of crossing the threshold.
  • Registration date is the 1st day of the second month after exceeding the limit.
  • Missing the deadline can mean penalties, interest, and paying VAT out of pocket.

How to Register for VAT

  • Go to gov.uk/register-for-vat with a Government Gateway account.
  • Sole traders need NI number, UTR, photo ID, bank details, and estimated turnover.
  • Companies need registration number, UTR, bank details, and estimated turnover.
  • Decide on special schemes (e.g. flat rate) during registration.

Voluntary VAT Registration

  • You can register even before reaching £90,000.
  • Benefits: reclaim input VAT, boost business credibility, prepare for Making Tax Digital.
  • Drawback: must charge VAT to all taxable customers, including those who cannot reclaim it.

Staying Compliant

  • Keep proper VAT records and issue compliant invoices.
  • Submit VAT returns on time via MTD-compliant software (like Xero).
  • Maintain accurate bookkeeping for insights and compliance.

Common Mistakes to Avoid

  • Ignoring the rolling 12-month calculation.
  • Forgetting to track taxable turnover inclusions.
  • Assuming voluntary registration always works in your favour.
  • Missing deadlines and failing to issue proper invoices.

Final Thoughts

VAT registration is manageable when you understand the triggers and process. Whether mandatory or voluntary, take control, keep records, and use digital tools to stay compliant. And if you need help, support is available.

Episode Timecodes

  • [00:00:00] – Intro: Should you register for VAT?
  • [00:00:43] – VAT registration rules and triggers
  • [00:02:30] – What counts as taxable turnover?
  • [00:04:00] – Deadlines and penalties
  • [00:05:44] – How to register online
  • [00:07:16] – Benefits of voluntary registration
  • [00:08:00] – Staying compliant with records and MTD
  • [00:09:27] – Wrapping up and next steps

Host & Show Info

Host Name: Mahmood Reza

About the Host: Mahmood is an accountant, tax expert, and founder of I Hate Numbers. With over 30 years helping businesses stay compliant and profitable, he simplifies complex tax rules so you can focus on growth.

Podcast Website: https://www.ihatenumbers.co.uk/i-hate-numbers-podcast/🎧 Listen & Subscribe to I Hate Numbers

Stay on top of VAT and business taxes. Listen on Apple Podcasts, share this episode, and subscribe for weekly insights. Plan it. Do it. Profit.

Additional Links

Transcript
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Welcome to this week's episode of I Hate

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Numbers, and today I'm gonna be talking about

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a topic that's a very popular question I get

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asked, and it's all about VAT registration.

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More specifically, should you register for VAT?

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When must you register for VAT and how do you

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exactly go about it?

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For many of our clients.

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They ask us to do that process, but I'm gonna

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give you a bit of a DIY overview, nevertheless,

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now that is one of those taxes that makes your

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head hurt, then don't worry, you're not alone.

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And in this episode, I'm gonna break it

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down step by step, and hopefully that will be

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less of a scary topic and you'll be more sorted.

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So firstly, do you need to register for VAT?

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So let's start with the basics.

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The rules say you must register VAT if your

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taxable turnover goes over 90,000 pounds in any

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rolling 12 month period.

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Now, 90,000 pounds, by the way, is the

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current threshold limit for registration.

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It does change over time, and this is not just

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based on what your last accounts are saying.

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It's not just January through December.

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It's on a continual 12th month period.

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Now this applies whether you're a sole trader,

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a partnership, a CIC, or a limited company.

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And if you're based outside the uk, by the

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way, but you are selling goods or services to UK

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customers, then yes, you still need to register.

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Now, there is another indication, another

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trigger, and if you think your taxable turnover

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is likely to go over 90,000 pounds in the

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next 30 days, that's the trigger point for

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registration as well.

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Now, let's throw some numbers and an

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example into the mix.

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Let's assume if.

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Runs a Keep Fit studio.

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Now, by the time he gets to the end of December,

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2024, his total turnover for those first 12

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months is 80,000 pounds.

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No need to register in terms of being

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compulsory registered.

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Now he moves on a month and he then he checks

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his turnover of February 24 to January 25, and

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his turnover is 82,000.

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Still nothing to do.

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Now, let's fast forward when he then looks at

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his figures in June 25 from July 24, up

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to including June 25.

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He sees that it's gone over 90,000 pounds

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Now that's the trigger point for registration.

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Now, if the assumption is that his turnover is

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not gonna dip below that level, and if anything

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is going to rise, then he has to register for VAT.

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Now, the registration date will be once you

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go over that 90,000 pound threshold over

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that rolling 12 month period, you notify and

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have to be registered within 30 days.

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So his registration date will be essentially the

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Now, what counts as taxable turnover?

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Now, this is where it trips people up.

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Now, first of all, it has nothing to do

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with profitability.

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Profitability and VAT are two separate items.

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Now, taxable turnover for most people

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and most businesses covers the majority

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of what you sell.

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And in VAT world, turnover is divided

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into categories.

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Category one is what's called

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standard rated goods.

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Category two is called reduced rated goods, and

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there's another one, and that's zero rated goods.

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Now, what doesn't get included in this

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determination threshold are what are called

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outside of the scope or that exempt items.

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Typically things like insurance.

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If your income comes from donations, a pure,

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genuine donation with no benefit given, then

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that doesn't count as part of your turnover.

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Now, here's the catch, and this is what trips

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a lot of people up.

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Taxable turnover in VAT terms includes goods

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that you lend out, free gifts to customers,

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borrowing services.

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Yes, that does go on where you're

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exchanging services between each other.

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Reverse charge services from overseas.

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So typically, if you are engaging Google ads,

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that's typically dealt with under a reverse

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charge and that amount of spend on Google ads.

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Goes towards your turnover goods that you

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withdraw personally, that come out of

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your business stock.

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And if you are in construction, any

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building work you do, over a hundred

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grand also counts.

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Now, as you go through each month,

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keep an eye on that turnover, tot it up.

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And once you exceed that 90,000 threshold,

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that's the early warning radar sounded.

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Now what do we do if the deadline is missed?

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And that's not uncommon.

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Now if you do miss the deadline, typically that

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trips into trouble and trouble in the VAT world

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means that let's likely speed penalties and

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interest and also some action points as well.

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So let's talk some deadlines.

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If your turnover crosses the threshold,

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you have that 30 day window to register from

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the end of that month.

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So if you hit your 90 grand during the month

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of June, you count it at the end of the month,

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you've got 30 days from there, and effectively

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your registration will be the 1st of August.

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Now, if you are in that situation, you've got

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a nice duty contract value of 102,000.

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Even though that in itself you may not have

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got paid fully, you haven't reached 90,000

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in the past, you expect to get that threshold

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cross in the next 30 days, then you've gotta

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register immediately.

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Now, it's very likely, I've come across it too

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many times over the last 30 years that people

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do miss the deadline.

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Now, VAT will take the viewpoint like most

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tax authorities, that you should know what

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your obligations are, the fact you are busy.

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The fact that you are spinning lots

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of plates doesn't make any difference.

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You owe that from the day you should have been

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registered, and they have the option to charge

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interest and penalties.

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Now, it's likely that if you haven't been charging

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VAT, that you may have to put your hand in

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your pocket and actually pay the VAT that's due.

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Now there are options.

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Options are you can go back to your customers

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and recharge 'em.

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The VAT.

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It becomes more challenging if you

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are selling business to consumer B2C, as

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you might call it.

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It becomes less of a challenge if you're doing

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business to business and other business.

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Is that registered Now?

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The next part I wanna look at is how do you

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actually go about the registration process?

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Well, the good news is registration is not as

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scary as it might sound.

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Firstly, go to gov uk slash register for vat.

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You will need a government

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gateway account.

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And most businesses can register online.

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Obviously, you do have the option of talking

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to your accountant, dropping us a line, but

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the registration process is more form filling.

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There are some questions that are particularly

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head scratching.

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And remember, if you're a sole trade

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or a partnership, this is what you'll need.

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You need your NI number, your UTR or

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unique tax reference.

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Photo.

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Id like your passport, business bank details and

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the estimated turnover.

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And that's going forward, not retrospectively.

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They'll also want to know the date that you expect

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it to be registered from, but that's the

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key information you'll need when you start

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completing the process.

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Now, if you're a limited company, you'll need

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the company registration number, the company UTR.

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Again, that's the tax reference of the company.

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Again, estimate the turnover and business

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bank account details.

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Now, for any reason you don't have the bank

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account details, you can just say they're

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being applied for.

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Now you've also gotta think about the

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special schemes and there are a few, so

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like flat rate scheme.

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Make that decision.

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Again, I would advise strongly towards your

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accountant to actually find out what you need

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to do, and I would probably myself delegate

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that or outsource that job to somebody else.

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If you're comfortable, absolutely fine.

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Now, there is the option, if you wanna circumvent

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this, to register early before you have to, and

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it's a voluntary VAT registration process.

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Now your turnover might be low, 90,000.

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You may think it's gonna get to that

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90,000 or you just wanna register anyway.

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Now, there are good reasons to

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register voluntarily.

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If you sell zero rate for you to items like

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children's clothing, printed books, and

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your customers are that registered, you

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are charging no vat.

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But you are reclaiming the input of that.

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So lemme just clarify that.

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If you're selling zero rated items, like

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children's clothes or printed books, and

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your suppliers are that registered, you'll

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be claiming VAT back and you are likely to

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get cash coming back into the business.

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There's also the added bonus that the VAT

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registration makes your business look

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more established, more professional, and it

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focuses you on keeping good, decent records.

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And also it's a great way to start early,

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getting prepared for making tax digital.

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So voluntary registration might give you money

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back from your costs.

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Business credibility, digital compliance, and

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more of a sharp business focus to become more in

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touch with your numbers.

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Now beware.

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Once you are registered, you've gotta charge that

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on all taxable supplies.

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So if your customers are not that registered, like

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individuals or businesses that aren't that

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registered, or charities, et cetera, then they

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cannot claim that that back and that 20% you've

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charged represents an additional cost to them.

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Now what I wanna conclude with now is

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about staying compliant and keeping records.

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And keeping records is a great way, by

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the way, to give you insight, number insight

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into your business.

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You've gotta keep detailed records of

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yourself and purchases.

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You've got to issue VAT invoices and

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compliance with the.

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Detail that's required.

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You've gotta submit your VAT returns on time.

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You've gotta use what's called MTD

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Compliance software.

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So packages like Xero, personal favorite of

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mine, and we are a zero platinum practice,

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is what I would recommend not only for

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VAT and bookkeeping, but it gives you so

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much insight to help running your business.

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Now bookkeeping is not just for the tax

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man, it gives you visibility and control.

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Remember, claiming VA back means you must

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have valid VAT invoices, your expenses, no

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invoice, no reclaim.

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So let's wrap this up.

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So when we actually gone through, what have we

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highlighted today that registration is required.

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Once your turnover has hit to 90,000, any

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12 month window, look at it as a rolling

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12 month process.

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You've got a register within 30 days of

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going over that limit.

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If you hit the threshold in the next

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30 days, you've gotta register straight away.

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You've gotta understand what counts towards

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your taxable turnover and what doesn't.

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You can, you do have the option of

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registering voluntarily.

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Sometimes that's a real smart move.

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Late registration, like anything in tax

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means costs paying back the tax and penalties

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and use good digital tools are at zero to

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stay on top of things.

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Now if you need help, I've got you.

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And if it feels overwhelming, you are

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by no means alone.

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And that's one of the reasons I wrote.

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I hate numbers.

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The book that cuts through the fog is

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packed with straight talking tips, real life

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examples, and no jargon.

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Check out the show notes to get your copy

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of this wonderful book.

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Those aren't just my words, by the way.

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Now, if you need one-to-one help book a

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15 minute call is free.

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I'll talk you through the rules, the registration,

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and what's right for your business.

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And remember the golden motto.

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Plan it, do it and profit it.

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