When to register for VAT

You must register if:

  • your total VAT taxable turnover for the last 12 months was over £85,000 (the VAT threshold)
  • you expect your turnover to go over £85,000 in the next 30 days

You must also register (regardless of VAT taxable turnover) if all of the following are true:

  • you’re based outside the UK
  • your business is based outside the UK
  • you supply any goods or services to the UK (or expect to in the next 30 days)

If you’re not sure if this applies to you, read the guidance on non-established-taxable-persons (NETPs).

You can choose to register for VAT if your turnover is less than £85,000 (‘voluntary registration’).

You must pay HM Revenue and Customs (HMRC) any VAT you owe from the date they register you.

If everything you sell is exempt from VAT, you do not have to register for VAT.

If you exceeded the threshold in the last 12 months

You must register if, by the end of any month, your total VAT taxable turnover for the last 12 months was over £85,000.

You have to register within 30 days of the end of the month when you went over the threshold. Your effective date of registration is the first day of the second month after you go over the threshold.

Example

Between 10 July 2019 and 9 July 2020 your VAT taxable turnover is £100,000. That’s the first time it has gone over the VAT threshold. You must register by 30 August 2020. Your effective date of registration is 1 September 2020.

If you’re going to exceed the threshold in the next 30 days

You must register if you realise that your annual total VAT taxable turnover is going to go over the £85,000 threshold in the next 30 days.

You have to register by the end of that 30-day period. Your effective date of registration is the date you realised, not the date your turnover went over the threshold.

Example

On 1 May, you arrange a £100,000 contract to provide services. You’ll be paid at the end of May. You must register by 30 May. Your effective date of registration will be 1 May.

If you sell goods or services that are VAT exempt and are based in Northern Ireland

You’ll need to register if you only sell goods or services that are exempt from VAT or ‘out of scope’ but you buy goods for more than £85,000 from EU VAT-registered suppliers to use in your business.

If you take over a VAT-registered business

You must register for VAT if the combined taxable turnover of the new business and your existing business is over the threshold.

Calculate your turnover

Your turnover is the total value of everything you sell that is not exempt from VAT. It also includes:

Late registration

If you register late, you must pay VAT on any sales you’ve made since the date you should have registered.

You might need to pay a penalty, depending on how much you owe and how late your registration is.

If you go over the threshold temporarily

You can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily.

Write to HMRC with evidence showing why you believe your VAT taxable turnover will not go over the deregistration threshold of £83,000 in the next 12 months.

HMRC will consider your exception and write to confirm if you get one. If not, they’ll register you for VAT.