Do we need to register for VAT?

If you make VATable supplies, you will need to register for VAT if your taxable turnover reaches the VAT registration threshold. The VAT registration threshold is set at £85,000.

The need to register for VAT is triggered if your VAT taxable turnover for the last 12 months exceeded £85,000 or if you expect your VAT taxable turnover to go over £85,000 in the next 30 days.

Taxable supplies

Taxable supplies for VAT purposes are supplies that are made in the UK and which are not exempt from VAT. This includes supplies liable at the zero rate of VAT, as well as those charged at the standard and reduced rates. You do not need to take account of exempt supplies when checking whether you need to register for VAT.

Voluntary registration

Registration is compulsory if your VAT taxable turnover meets either of the tests set out above.

However, if you make taxable supplies but your taxable turnover is below the VAT registration threshold, you can choose to register for VAT voluntarily. This will be beneficial if the value of your input VAT exceeds the value of your output VAT, allowing you to reclaim the difference from HMRC. This may be the case where the supplies that you make are predominantly zero-rated (for example, if you sell zero-rated food items or children’s clothes).

When to register

If your VAT taxable turnover in the last 12 months exceeded the VAT registration threshold of £85,000, you must register for VAT within 30 days of the end of the month in which your turnover for the previous 12 months went over £85,000. Your effective date of registration is the first day of the second month after the threshold has been breached.

Example

Molly’s VAT taxable turnover for the previous 12 months exceeded £85,000 on 2 August 2023. This is the first time that she has exceeded the VAT registration threshold. Molly must register for VAT by 30 September 2023 (30 days from the end of August 2023 – the month in which her turnover exceeded the threshold). Her VAT registration is effective from 1 October 2023.

If your VAT taxable turnover will exceed £85,000 in the next 30 days, you must register by the end of the 30-day period. Your effective date of registration is the date that you realised that this would be the case, not the end of the 30-day period.

Example

On 6 August 2023, Paul agreed a contract for £120,000 to provide services in August 2023. He will be paid on 30 August 2023. He realised on 6 August that his turnover will go over £85,000 in the next 30 days. He must register by 5 September 2023. His registration is effective from 6 August 2023.

How to register

You can register for VAT online via the gov.uk website. You can also ask your agent to register on your behalf.