VAT Registration

A limited company must register to pay VAT when the value of its taxable supplies exceed the registration threshold.

The current registration threshold is £90,000’.

Yes, if you make all or the overwhelming majority of your sales to VAT registered businesses, because you will be able to reclaim VAT on any business expenses you incur.  Voluntary registration is the term given when becoming VAT registered below the registration threshold.

Entry to the flat rate VAT scheme can also be applied for. Please click here for more information about the flat rate VAT scheme.

You (or your accountant) will need to complete a VAT application form, which is available from HMRC. This should be completed online, unless you meet one of the very limited exemptions.

There is no charge for completing the form. Once registered, you will then have to complete quarterly VAT returns online.

You need to register for VAT if at the end of any month, the value of your taxable supplies in the previous 12 months or less exceeds the registration threshold, or if at any time you expect the value of your taxable supplies in the next 30 days alone to exceed the registration threshold.

As stated above, it can be beneficial if you make all or most of your sales to VAT registered businesses, because you can reclaim VAT on any business expenses you incur.

Benefits attached to the flat rate VAT scheme can also be applied for.

If you can provide evidence and explain why the value of your taxable supplies will not go over the de-registration threshold (£88,000 in 2024/25) in the next 12 months, you may not need to register for VAT.

However, you still have to inform the HMRC National Registration Service that you have reached the turnover threshold.

Subject to certain conditions, you can reclaim any VAT incurred before you registered. This would include VAT on goods you bought for your business within the past three years and which you have not yet sold, and VAT on any services you received not more than six months before your date of registration.

You are not allowed to do this - HMRC will not allow you to artificially separate your business to avoid VAT registration.

Yes, all sales are based on the registration threshold, whether or not these are made in the UK.