VAT Registration Threshold

You must register for VAT if your taxable turnover exceeds £90,000 in a rolling 12-month period. The threshold increased to £90,000 from April 2024.

If your turnover is below this threshold, you can still register voluntarily. This can be beneficial in some cases, especially if you work with VAT-registered customers, but it may also add extra administration.

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VAT Schemes Available

Standard VAT Scheme – You charge VAT on sales, reclaim VAT on business purchases and usually submit VAT returns quarterly.

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Flat Rate Scheme – You pay a fixed percentage of your VAT-inclusive turnover to HMRC. This can simplify accounting, but you may not be able to reclaim VAT on most purchases.

Cash Accounting Scheme – You pay VAT to HMRC only when your customers pay you. This can help with cash flow.

Annual Accounting Scheme – You make advance VAT payments during the year and submit one VAT return per year.

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 VAT Rates

Standard Rate: 20% – most goods and services.

Reduced Rate: 5% – some goods and services, for example children’s car seats and home energy.

Zero Rate: 0% – zero-rated goods and services, for example most food and children’s clothes.

Exempt Items: No VAT is charged, for example some financial services and education.

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VAT Filing & Deadlines

VAT returns are submitted online through Making Tax Digital (MTD) for VAT using compatible software such as Xero.

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Filing is usually quarterly. The deadline is normally one month and seven days after the end of the VAT period. This is also usually the deadline for paying HMRC.

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VAT and Self-Employment

Self-employed individuals must register for VAT if their taxable turnover exceeds the VAT registration threshold.

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VAT can apply to both goods and services, including digital sales.