VAT (Value Added Tax) is a tax added to most products and services sold by VAT-registered businesses.

Businesses have to register for VAT if their VAT taxable turnover is more than £90,000. They can also choose to register if their turnover is less than £90,000.

This guide is also available in Welsh (Cymraeg).

Your responsibilities as a VAT-registered business

As a VAT-registered business you must:

  • include VAT in the price of all goods and services at the correct rate
  • keep records of how much VAT you pay for things you buy for your business
  • account for VAT on any goods you import into the UK 
  • report the amount of VAT you charged your customers and the amount of VAT you paid to other businesses by sending a VAT return to HM Revenue and Customs (HMRC) - usually every 3 months
  • pay any VAT you owe to HMRC

The VAT you pay is usually the difference between any VAT you’ve paid to other businesses, and the VAT you’ve charged your customers.

If you’ve charged more VAT than you’ve paid, you must pay the difference to HMRC.

If you’ve paid more VAT than you’ve charged, HMRC will usually repay you the difference.

You can appoint an agent to deal with HMRC on your behalf if you prefer.

There are VAT schemes you can join that affect how you calculate and report the VAT you owe HMRC.