Value Added Tax (VAT) is a government tax on the sale of most goods and services in the UK.1 (external link) Businesses with turnovers exceeding £90,000 (external link) must register for VAT with HMRC.
This guide explains who needs to register for VAT, when to do it, what information you’ll need, and what you can usually expect once you’re set up.
What is VAT and who needs to register?
VAT is a tax collected by businesses on behalf of HMRC. Most goods and services sold in the UK – as well as certain imports (external link) – are subject to VAT.
You may need to register for VAT if you operate as:
- A sole proprietor: an individual who owns and runs a business on their own. You keep all profits but are personally responsible for any debts and liabilities.
- A partnership: a business run by two or more people who share responsibility for profits, losses, and liabilities.
- A corporate body (including limited companies): a business that is legally separate from its owners. It has its own finances and must be registered with Companies House (external link).
- A club or association: this can include sports clubs, social clubs, or charities. Even if not-for-profit, you may be required to register for VAT if your turnover exceeds the registration threshold.
You can also register for VAT voluntarily, even if your turnover is below £90,000. Voluntary registration means you can reclaim VAT on business expenses, which may help reduce costs if you purchase goods and services from VAT-registered suppliers.
When should you register for VAT?
Timely registration can help avoid potential penalties (external link) and backdated VAT bills. The timing for registration depends on your specific circumstances:
| Situation (external link) | When to register |
|---|---|
| Turnover exceeds £90,000 in the past 12 months | Within 30 days of the end of the month in which you exceed the threshold |
| Forecasted turnover will exceed £90,000 in the next 30 days | By the end of the 30-day period |
| Voluntary registration | At any time |
What information do you need to register for VAT?
Before applying, it can be helpful to gather certain details and documents. These may include:
- Your business’s legal structure (sole proprietor, limited company, etc).
- Business name and trading name (if different).
- Description of your business activities.
- Bank account details.
- Turnover figures and accounting period dates.
- Self Assessment tax return for the self-employed.
- National Insurance number (for sole proprietors and partners).
- Company registration number and Unique Taxpayer reference (for companies).
For the full list, visit GOV.UK (external link).
Registering for VAT
In most cases, businesses can register for VAT online through HMRC:
- Visit the HMRC VAT registration service (external link).
- Sign in with your Government Gateway user ID or create one if you don’t already have an account.
- Complete the VAT registration application, providing all requested details.
- Submit any required supporting documents.
- Wait for HMRC to confirm your registration and issue your VAT certificate.
Registering a group, partnership, or with an agent
If two or more companies are under the same ownership or control (for example, a parent company and its subsidiaries), those companies can register as a single group. However, one company will need to act as a representative or main point of contact with HMRC on behalf of the group. For partnerships, the registration process typically requires details for all partners.
If you’d like an agent, such as an accountant, to register for you, they’ll require permission to do so. This can be done by completing a form on GOV.UK (external link). The application will ask for:
- The name of the current or prospective VAT group representative member.
- Nominated agent details – including name, address, and phone number.
- Details of the individual authorising the agent to apply for the group.
What are VAT schemes?
VAT schemes are voluntary arrangements that simplify how businesses calculate and pay VAT to HMRC.2 (external link) You can choose from different schemes, depending on your type of business and annual turnover:
- Standard VAT accounting. You charge VAT on your sales and reclaim VAT on your purchases. VAT returns are submitted quarterly.
- Flat Rate Scheme (external link). You pay a fixed percentage of your gross turnover to HMRC. This scheme is only available to businesses with an annual turnover of £150,000 or less – excluding VAT.
- Annual Accounting Scheme (external link). Instead of filing VAT returns quarterly, you submit one annual return. You make advanced payments towards your VAT bill based on your previous return.
- Cash Accounting Scheme (external link). Under standard rules, VAT is calculated from the date invoices are issued – not when they’re paid. With this scheme, you pay VAT only when you receive payment from customers and reclaim VAT when you pay your suppliers.
- Margin Scheme (external link). You only pay VAT on the difference between what you paid for an item and the amount you sold it for, with VAT charged at 16.67%. You can use this scheme if you sell second-hand goods, works of art, antiques, or collectors’ items.
- Retail Schemes (external link). Rather than calculating VAT on each individual sale, you do it once when you complete your annual return. The three main retail schemes are the Point of Sale Scheme (external link), the Apportionment Scheme (external link), and the Direct Calculation Scheme (external link).
What happens after you register?
Once registered, you’ll:
- Receive a VAT registration number.
- Get a VAT certificate. Need to start charging VAT on taxable sales from your effective registration date.
- Submit VAT returns and payments on time.
- Keep VAT records and invoices in line with HMRC requirements.
What is a VAT certificate and how do you receive it?
A VAT certificate confirms your:
- VAT registration number.
- Effective date of registration.
- Date of issue.
- Deadline for submitting your VAT returns.
This certificate is typically uploaded to your VAT online account. You can access your online VAT certificate by signing into your Government Gateway (external link) account and navigating to your VAT account. In some cases, you may receive it by post. In some cases, you may receive it by post.
Common VAT registration issues and what to check for
Before you apply, check that:
- You’ve calculated your turnover correctly for the rolling 12-month period.
- You have all the required documents to hand.
- Your business details are consistent with Companies House and HMRC records.
- You understand your reporting obligations under Making Tax Digital (MTD), as all businesses that meet the VAT threshold are required to register for MTD.
- You’ve chosen the correct VAT scheme.
Disclaimer:
At Hiscox, we want to help your small business thrive. Our blog has many articles you may find useful as you navigate your business tax obligations. But these articles aren’t professional tax advice and should not be relied upon as such. Tax laws are complex, frequently changing, and can vary by individual circumstances. So, to find out more about a subject we cover here, please seek professional tax assistance.