How to Register for VAT in the UK: Step-by-Step Guide

Q: Should I deregister if my income drops?

Compare what registration gives you with what it costs. Worked example: you sell £80,000 a year to consumers at VAT-inclusive prices, so £80,000 ÷ 6 = £13,333.33 of that is VAT you pay to HMRC, and you reclaim £2,400 a year of input VAT. If you deregister and keep the same prices, you keep the £13,333.33 but lose the £2,400 of reclaims, leaving you about £10,933 a year better off before any VAT due on stock and assets at cancellation. If your clients are VAT-registered businesses, staying registered usually costs them nothing, so the case for deregistering is weaker. Model both with your own numbers.

VAT registration in the UK is compulsory once you cross the threshold, and optional below it if registering helps you, for example because your customers are VAT-registered businesses that can reclaim the VAT you charge. The application is online; the parts that trip people up are the registration date, invoicing while you wait for your VAT number, and record-keeping afterwards. This guide follows HMRC's rules on GOV.UK. It is general information, not tax advice.

Check if you must register

Check your rolling 12-month taxable turnover at the end of every month against the VAT registration threshold. Taxable turnover is everything you sell that is not VAT-exempt or outside the scope of VAT, including zero-rated and reduced-rated sales. There are two tests:

Backward look: if your taxable turnover for the last 12 months goes over £90,000, you must register within 30 days of the end of the month in which you went over. Your effective date of registration is the first day of the second month after you went over. GOV.UK's example: turnover first goes over the threshold on 15 July, you must register by 30 August, and you are registered from 1 September.
Forward look: if you realise your taxable turnover will go over £90,000 in the next 30 days alone (for example, you win a single £100,000 contract), you must register by the end of that 30-day period, and your effective date is the date you realised.

You do not have to register if you only sell VAT-exempt or out-of-scope goods and services. You can register voluntarily below the threshold. Keep a note of how you worked out turnover so you can show why you chose your registration date.

Gather information before you apply

Have ready your business name and address, your company registration number if you are a limited company, your bank details, a description of your business activities, and your turnover figures and expected turnover. If you trade under several brand names, be clear which legal person (you as a sole trader, a partnership or a company) will hold the VAT number.

Apply online through HMRC

Most businesses register online through HMRC's service. HMRC then confirms your VAT number and effective date of registration. Processing times vary; HMRC publishes current times in its check when you can expect a reply tool.

While you wait for your number, you cannot include VAT on your invoices, but you can raise your prices to cover the VAT you will owe from your effective date. Once the number arrives, reissue those invoices as VAT invoices showing the VAT. In GOV.UK's example, a supplier tells the customer that 20% will be added to a £100,000 contract, invoices £120,000, then reissues the invoice showing £20,000 VAT once registered; the customer pays nothing extra and can reclaim the £20,000.

Choose a VAT scheme (if eligible)

HMRC offers schemes that change how you work out or report VAT. Eligibility as published on GOV.UK:

Scheme	Who can join	What it changes
Flat Rate Scheme	VAT turnover £150,000 or less (excluding VAT)	You pay a fixed percentage of turnover and generally can't reclaim VAT on purchases, except certain capital assets over £2,000
Cash Accounting Scheme	VAT taxable turnover £1.35 million or less	You pay VAT on sales when customers pay you and reclaim it on purchases when you have paid
Annual Accounting Scheme	Estimated VAT taxable turnover £1.35 million or less	One VAT return a year with advance payments, so only one repayment a year

Cash accounting often suits businesses whose clients pay late, because you don't pay VAT on invoices you haven't been paid for. An accountant can compare the schemes for your figures.

Making Tax Digital (MTD)

VAT-registered businesses must keep digital VAT records and file VAT returns using software compatible with Making Tax Digital, unless HMRC grants an exemption (VAT Notice 700/22). You can use a compatible software package, or bridging software that connects non-compatible records such as spreadsheets to HMRC (find compatible software). Set this up before your first VAT period ends.

Invoicing after registration

From your effective date you must issue VAT invoices to VAT-registered customers, generally within 30 days, showing your VAT number, the tax point, the VAT rate and the VAT amount in sterling, among other details (VAT Notice 700, section 16). Our VAT invoicing guide and UK invoice requirements list every field. Pair them with what to include on an invoice for non-VAT details such as payment instructions and purchase order references.

In InvoiceQuickly: you can invoice in GBP and add one tax percentage per invoice, which prints as "Tax (20%)" on the PDF. Your VAT number is copied to new invoice PDFs, so type it, and any other VAT wording your invoice needs, into the invoice notes. Check the result against the HMRC list before sending.

Common mistakes

Registering late. You must pay VAT on sales made since the date you should have been registered, and you might have to pay a penalty depending on how much you owe and how late you are (GOV.UK).
Mixing personal and business spending, which makes input VAT claims hard to support.
The wrong rate on an invoice. Check the rate for each type of supply.
Credit notes in the wrong period. Make each credit note's VAT adjustment in the correct VAT period, following VAT Notice 700.
Reconciling only at filing time. Reconcile output and input VAT monthly.

Ongoing compliance

Submit each VAT return and pay any VAT due by the deadline, which is usually one calendar month and 7 days after the end of the VAT period (VAT return deadlines). Most businesses file every 3 months. Keep VAT records for at least 6 years (keeping VAT records). If you later cancel your registration, follow the cancellation rules below.

Cash flow after registration

Adding 20% VAT raises the price for customers who can't reclaim it. Worked example: you sell a £100 service to consumers. If you keep the price at £100 including VAT, you keep £100 ÷ 1.2 = £83.33 and pay £16.67 to HMRC. If you raise the price to £120, the customer pays more and you keep £100. For business customers that are VAT-registered, the £20 is usually reclaimable, so their net cost doesn't change. Some businesses time a voluntary registration to coincide with a price change.

Record-keeping under MTD

Digital links between your invoicing records and the figures in your VAT return reduce errors. Copying numbers by hand between systems is where mistakes happen. Choose your software early and do a trial run of a month's figures before your first return.

Create GBP invoices with a 20% tax line: start free.

UK VAT registration thresholds

Threshold	Amount	Since	Source
Registration (taxable turnover, rolling 12 months or next 30 days)	£90,000	1 April 2024 (was £85,000)	GOV.UK policy paper; VAT Notice 700/1 supplement
Deregistration (you may ask to cancel)	£88,000	1 April 2024 (was £83,000)	Same
Non-established taxable persons (business based outside the UK)	No threshold: register if you make any taxable supplies in the UK	1 December 2012	VAT Notice 700/1 supplement
Voluntary registration	Below £90,000	n/a	GOV.UK

The old £70,000 distance-selling threshold ended on 1 July 2021. Separate distance-selling and acquisitions rules now apply only to goods moving between Northern Ireland and the EU; see the VAT Notice 700/1 supplement if that applies to you.

Step-by-step: registering for UK VAT

Step 1: Decide whether you must or want to register

Compulsory: your rolling 12-month taxable turnover goes over £90,000, or you expect to go over it in the next 30 days alone. Voluntary: you are below the threshold but registering helps, typically because your customers are VAT-registered businesses that reclaim the VAT you charge, while you can reclaim VAT on your own business costs.

Step 2: Work out your effective date of registration

Use the backward-look and forward-look rules above. Under the backward look, register within 30 days of the end of the month you went over; the effective date is the first day of the second month after. Under the forward look, the effective date is the day you realised. You owe VAT from your effective date.

Step 3: Apply through HMRC online

Apply through GOV.UK's register for VAT service. Have your business details, activity description, turnover figures and bank details ready.

Step 4: Set up Making Tax Digital

Choose MTD-compatible software, or bridging software for spreadsheets, and set it up before the end of your first VAT period.

Step 5: File VAT returns

Returns are usually quarterly. Submit online and pay by one calendar month and 7 days after the end of each period. If you reclaim more VAT than you charged, HMRC usually repays the difference within 30 days of receiving your return, though checks can take longer (VAT repayments).

VAT rate categories (UK)

Rate	Applies to	Examples from GOV.UK
Standard 20%	Most goods and services	Most professional services
Reduced 5%	Some goods and services	Children's car seats, home energy
Zero 0%	Zero-rated goods and services	Most food, children's clothes, books and newspapers, passenger transport in vehicles carrying 10 or more passengers
Exempt	Exempt supplies (no VAT, and they don't count towards taxable turnover)	Postage stamps, financial and property transactions
Outside the scope	Not covered by UK VAT	Non-business activities, and some services whose place of supply is outside the UK (VAT Notice 741A)

Sources: VAT rates and rates of VAT on different goods and services, both GOV.UK, accessed 28 October 2026.

Common scenarios

Sole trader crossing £90,000: registration is compulsory from the effective date. Charge 20% VAT on standard-rated UK sales from then on, reclaim VAT on business purchases, and file returns, usually quarterly. VAT-registered business clients can usually reclaim the VAT you charge.

Sole trader at £45,000 considering voluntary registration: worth considering if most clients are VAT-registered businesses. Worked example: £45,000 of sales to business clients plus 20% VAT = £9,000 output VAT; £6,000 of standard-rated business costs carry £1,000 input VAT, so you pay HMRC £8,000 and are £1,000 better off, while your clients reclaim the £9,000. If most clients are consumers, they can't reclaim VAT, so you would either raise prices by up to 20% or absorb the VAT.

Business based outside the UK selling to UK customers: if neither you nor your business is based in the UK and you make taxable supplies in the UK, you must register whatever your turnover. Whether a particular service is a UK supply depends on the place-of-supply rules; for many business-to-business services the UK customer accounts for the VAT under the reverse charge (VAT Notice 741A). Take advice before your first UK sale.

Frequently asked questions

What happens if I don't register when I should?

You must pay VAT on all sales made since the date you should have been registered, even if you didn't charge your customers VAT, and you might be charged a penalty depending on how much you owe and how late your registration is (GOV.UK). Register as soon as you realise.

Can I deregister if my turnover drops below £88,000?

Yes. If your taxable turnover falls below £88,000 you can ask HMRC to cancel your registration, online or by post. You must cancel within 30 days if you stop being eligible, for example because you stop trading. You then submit a final VAT return up to the cancellation date and must account for VAT on stock and other assets you still hold if you could have reclaimed VAT on them and the VAT due on them is over £1,000 (cancel your VAT registration).

Do I need an accountant for VAT?

It isn't required. Many small businesses file their own returns using MTD-compatible software. An accountant is most useful when you choose a scheme, sell across borders, or have mixed taxable and exempt sales.

What is MTD-compatible software?

Software that keeps your VAT records digitally and submits VAT returns to HMRC, or bridging software that links spreadsheets to HMRC. HMRC's software finder lists products you can filter by your needs.

Should I deregister if my income drops?

Compare what registration gives you with what it costs. Worked example: you sell £80,000 a year to consumers at VAT-inclusive prices, so £80,000 ÷ 6 = £13,333.33 of that is VAT you pay to HMRC, and you reclaim £2,400 a year of input VAT. If you deregister and keep the same prices, you keep the £13,333.33 but lose the £2,400 of reclaims, leaving you about £10,933 a year better off before any VAT due on stock and assets at cancellation. If your clients are VAT-registered businesses, staying registered usually costs them nothing, so the case for deregistering is weaker. Model both with your own numbers.

Last reviewed: 28 October 2026 against GOV.UK and HMRC guidance. This is general information, not tax advice. Thresholds and rules can change; check GOV.UK or a tax adviser before you act.