UK VAT and Registration Requirements

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What is VAT?

Value Added Tax (VAT) is a sales tax in other words tax on sales/turnover. It is charged on supply of services and goods. 

In the UK, there are three main tax rates standard rate of 20%, reduced rate of 5% and zero rate (0%). There is also VAT exempt supplies as well as supplies that are outside the scope of VAT i.e. not considered for VAT purposes. 

If you run a business in the UK, it’s essential to stay on top of VAT regulations to remain compliant with HMRC. One key aspect is knowing when you must register for VAT.

VAT Registration Threshold

As of now, businesses must register for VAT once their total taxable turnover exceeds £90,000 in any 12-month period. Monitoring your turnover closely is vital to ensure you don’t miss this threshold and risk penalties.

When You Must Register Regardless of Turnover

Certain businesses must register for VAT even if their taxable turnover is below £90,000. This applies if all of the following are true:

• You’re based outside the UK
• Your business is based outside the UK
• You supply, or expect to supply, goods or services to the UK within the next 30 days

Taking Over a VAT-Registered Business

If you take over an existing VAT-registered business, you must register for VAT from the start of the business, even if you trade under a new company or entity. This ensures continuity and compliance with HMRC regulations.

How We Can Help

If your business is approaching, has exceeded, or is expected to exceed the VAT threshold, we can assist you with:

• VAT registration
• Understanding how VAT works, including charging VAT on eligible goods and services
• Submitting VAT returns

Even if your turnover is below the threshold, you may choose to voluntarily register for VAT for specific business advantages, such as reclaiming VAT on purchases.

Questions About VAT?

If you have any questions regarding VAT registration or compliance, don’t hesitate to get in touch. 

T: 020 7018 2910

E: info@ozcanaccountants.com