VAT Registration UK: When to Register and How It Works

You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period, or if you expect it to exceed £90,000 in the next 30 days alone. Registration is with HMRC and typically takes 1-4 weeks.

Once registered, you charge 20% VAT on most goods and services (5% reduced rate on some items like home energy, 0% on most food and children's clothing). You collect VAT from customers and pay it to HMRC, minus the VAT you have been charged on business purchases (input tax). VAT returns are usually submitted quarterly via Making Tax Digital (MTD) compatible software.

Voluntary registration below the threshold can be beneficial if your customers are VAT-registered businesses (they reclaim the VAT anyway) and you have significant input VAT to reclaim. The Flat Rate Scheme simplifies things for smaller businesses — you charge 20% to customers but pay HMRC a fixed percentage of gross turnover (the rate depends on your industry).