VAT registration is an important milestone for many growing businesses, but the rules can be confusing if you are not sure when registration becomes compulsory.
For most UK businesses, the key figure to watch is your taxable turnover.
At Xpert Accounting, we help businesses understand when VAT registration is required, complete the registration process and manage ongoing VAT returns.
What is the VAT registration threshold?
The current VAT registration threshold is £90,000.
You must normally register for VAT if:
- your total taxable turnover for the previous 12 months goes above £90,000, or
- you expect your taxable turnover to go above £90,000 within the next 30 days.
Taxable turnover means the total value of the goods and services you sell that are not exempt from VAT.
This can include standard-rated, reduced-rated and zero-rated sales.
What happens if you exceed the threshold?
If your taxable turnover goes above £90,000 over a rolling 12-month period, you normally need to register within 30 days of the end of the month in which you exceeded the threshold.
Your effective VAT registration date will generally be the first day of the second month after you exceeded it.
For example, if your rolling taxable turnover first goes over the threshold during July, you would normally need to register by the end of August, with VAT registration taking effect from 1 September.
What if you know you will exceed £90,000 soon?
There is a separate rule where you expect your taxable turnover to exceed £90,000 in the next 30 days alone.
In this situation, you must normally register by the end of that 30-day period.
Your effective registration date is the date you first realised that your turnover would exceed the threshold.
This can be particularly important for businesses that secure a large contract or experience a sudden increase in sales.
Can you register for VAT before reaching the threshold?
Yes.
Businesses with taxable turnover below £90,000 can choose to register voluntarily.
There can be advantages to voluntary registration, such as being able to reclaim VAT on qualifying business purchases.
However, becoming VAT registered also creates additional responsibilities, including charging VAT where required, keeping appropriate VAT records and submitting VAT returns.
Whether voluntary registration is worthwhile depends on the type of business, its customers and its costs.
What does VAT registration involve?
Once registered, a business will generally need to:
- charge the correct rate of VAT on taxable sales
- keep VAT records
- issue appropriate VAT invoices
- submit VAT returns
- pay any VAT owed to HMRC
- follow Making Tax Digital requirements where applicable
Accurate bookkeeping becomes particularly important once a business is VAT registered.
Can an accountant help with VAT?
Yes.
An accountant can help you determine whether and when registration is required, complete the VAT registration process and assist with ongoing VAT returns.
They can also help you understand how VAT affects your pricing, cash flow and business records.
HMRC allows businesses to appoint an accountant or other agent to manage VAT returns and deal with HMRC on their behalf.
Don’t wait until the last minute
VAT registration is based on a rolling 12-month period, not simply your financial year.
That means growing businesses should monitor their turnover regularly rather than waiting until year end.
Failing to register at the correct time can result in VAT becoming due from an earlier date, along with possible penalties and interest.
Need help with VAT registration or returns?
Xpert Accounting supports businesses with VAT registration, bookkeeping and VAT returns.
Whether your business is approaching the VAT threshold, considering voluntary registration or already VAT registered, we can help you understand your responsibilities and keep your records in order.
We’re based in Preston and support businesses across the UK.
If you’re unsure whether your business needs to register for VAT, contact Xpert Accounting for advice based on your circumstances.