When Do I Need To Register A Company For VAT?

1 September 2021

You must register your business for VAT if your company’s VAT taxable turnover exceeds the registration threshold. This is currently £85,000.

advice : Tax

You must register your business for VAT if your company’s VAT taxable turnover exceeds the registration threshold. This is currently £85,000.

You must register if:

  • at the end of any month, the value of your VAT taxable supplies in the previous 12 months or less is more than £85,000; or
  • at any time if you expect the value of your taxable supplies in the next 30 day period alone to exceed £85,000.

Different thresholds apply to businesses based in Northern Ireland for buying from and selling to EU countries.

VAT taxable turnover

The VAT taxable turnover is the total value of sales that are not exempt from VAT. Thus, you should include sales that would attract VAT at the standard rate, the reduced rate or which are zero rated, but not sales that are exempt from VAT.

Exception from registration

If you exceed the VAT registration threshold but believe that your company’s VAT taxable turnover will not exceed the deregistration threshold, currently £83,000, in the next 12 months, you can apply to HMRC for an exception from registration. This can be done on form VAT1. This may be case if you have a one-off sale that is particularly large,

Registering for VAT voluntarily

Registration is compulsory if your company’s VAT taxable turnover exceeds the registration threshold (unless an exception applies). However, if your company’s VAT taxable turnover is below this level, you may choose to register for VAT voluntarily. This can be advantageous, particularly if you supply goods that are zero rated (such as food) as it will enable you to reclaim any VAT that you pay on purchases.

How to register for VAT

Most businesses are able to register online on the gov.uk website. In certain cases, registration must be done by post, for example, if you apply to join the agricultural flat rate scheme.

You will receive a VAT registration number once your company has been registered for VAT. You should receive a VAT registration certificate within 30 days.

Implications of being VAT-registered

Once you have registered your company for VAT, you will need to charge VAT at the appropriate rate on any sales that you make. You will also be able to reclaim any input tax that you suffer on purchases.

You may choose to join one of the schemes to simplify the process and reduce the associated VAT return, for example, the flat rate scheme for small business.