VAT registration: How to get started without hassle
VAT registration is a key milestone for growing businesses. If your taxable turnover reaches £90,000, registering for VAT becomes a legal requirement. Fortunately, the process is simple and can be done online.
Once registered, businesses must charge VAT on applicable sales, file VAT returns regularly, and maintain accurate financial records. Failing to meet these requirements can result in penalties, so understanding the process is essential.
In this blog, we’ll walk you through VAT registration, explain the different VAT schemes, and help you navigate your VAT obligations with confidence.
What is included in taxable turnover?
Taxable turnover is the total value of everything you sell that is not VAT-exempt or classified as out of scope goods and services.
It includes:
- Zero-rated, reduced-rated, and standard-rated goods
- Goods you hired or loaned to customers
- Business goods used for personal purposes
- Goods you bartered, part-exchanged, or gave as gifts
- Services received from overseas businesses that require a ‘reverse charge’
- Goods and services subject to the ‘domestic reverse charge’
- Building work over £100,000 carried out by your own business
Why register for VAT? Key benefits for your business
Registering for VAT can offer several advantages. Here’s why it might be a smart move:
1. Claim back VAT on business expenses
When you register for VAT, you can reclaim the VAT you pay on business-related purchases. Whether you’re buying equipment, office furniture, or supplies, this could lead to significant savings. Instead of absorbing these costs, you get some of that money back.
2. Improve cash flow
If your business has higher VAT-inclusive expenses, registering early means you can reclaim VAT before your revenue grows beyond £90,000. This can free up cash to reinvest in your business.
3. Enhance your business reputation
VAT registration can make your business appear more established and credible. Some clients and suppliers prefer working with VAT-registered businesses, as it signals a certain level of professionalism and growth.
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4. Avoid future hassle
Once your turnover exceeds £90,000, VAT registration becomes mandatory. By registering early, you can get familiar with the process and avoid any last-minute stress when you hit the threshold.
5. More business opportunities
Many larger companies prefer working with VAT-registered businesses, especially if they are VAT-registered themselves. This could open up opportunities that might not be available otherwise.
6. Encourages better record-keeping
VAT registration requires regular financial reporting, which can encourage better bookkeeping and financial management. This helps you stay on top of your finances and be better prepared for tax season.
When is VAT registration required?
Not every business needs to register for VAT right away, but some do. If your business’s taxable turnover reaches the £90,000 threshold within the last 12 months, or if you anticipate it doing so in the next year, you must register for VAT.
Registering on time—whether online or with a VAT1 form—helps you avoid significant fines from HMRC. By taking action as soon as your turnover grows, you can avoid these penalties and keep your business compliant.
Is voluntary VAT registration below the threshold possible?
Yes, it is possible.
If your business makes less than £90,000 a year, you don’t have to register—but you can if you want to. It might help you claim back VAT on expenses or make your business look more professional.
How to complete your VAT registration?
Many people have doubts about how to register for VAT. There are two main ways to get it done—online or with a VAT1 paper form. Both methods are simple if you have everything you need.
What you’ll need:
- Your business contact information
- Bank account details
- Your Unique Tax Reference number
- Information about your turnover and the nature of your business
Registering for VAT online
If you choose the online option, you’ll use your Government Gateway ID—a unique 12-digit number with a password that lets you access the HMRC portal. If you don’t already have an account, you can easily create one by following these steps:
- Visit the Register for HMRC taxes page and select the option that suits you.
- Click “next” to move through the pages.
- On the final page, choose “Create an account for me” and enter your details. Be sure to keep your new user ID and password safe.
- Sign in with your Government Gateway details.
- Scroll down to the “Get another tax, duty or scheme” section, click the button below it, and select VAT.
- Follow the remaining steps to complete your VAT registration application.
If you already have a Government Gateway account, the process is similar. Just log in, navigate to the “Get another tax, duty or scheme” section, choose VAT, and follow the instructions.
Registering for VAT using the VAT1 form
For most businesses, online registration is the easiest route. However, you might need to use the VAT1 paper form if, for example, you’re applying for a VAT registration exemption, registering several business units under different VAT numbers, or joining the Agricultural Flat Rate Scheme. In these cases, simply fill out the VAT1 form and send it to HMRC by post.
What to expect after VAT registration
Once you’re registered for VAT, you’ll get an online account where your VAT certificate will arrive within about 30 days. This certificate confirms your VAT number and lets you know when to file your first VAT Return and make your payment. With this certificate in hand, you can start submitting your VAT Returns.
You’ll typically receive reminders to help you stay on track. Your VAT accounting begins from the date you were required to register, either because you hit, or are about to hit, the £90,000 threshold or because you chose to register voluntarily.
What are the different VAT schemes to consider?
Before registering for VAT, it’s a good idea to explore the different VAT schemes available and choose the one that best fits your business needs. If you have an accountant or business adviser, they can help you decide the most suitable option. Here are some VAT schemes you should know about:
Annual accounting VAT scheme
File just one VAT return per year. You’ll make advance VAT payments based on your previous return or an estimated figure if you’re new to VAT. The scheme can be used if your estimated VAT taxable turnover is £1.35 million or less.
VAT flat rate scheme
When you’re on the flat rate scheme, you still add VAT to your sales (this is your output VAT) and pay VAT on your purchases (input VAT) just like usual. But when it’s time to do your VAT return, the process changes a bit.
Instead of working out the difference between what you’ve charged and what you’ve spent, you simply total up your gross sales—including the VAT you’ve charged—and then pay a fixed percentage of that total to HMRC. This percentage is based on your type of business. However, if your business qualifies as a limited cost trader, a higher rate applies.
This method simplifies the VAT process, especially for small businesses, by reducing the paperwork and making your VAT payments more predictable.
VAT cash accounting scheme
With this scheme, you pay VAT only after receiving payment from your customers. You can reclaim VAT on your purchases once you’ve paid your suppliers.
Conclusion
Registering for VAT might feel like a big step, but it’s easier than you think. Whether you’re required to do it or choose to register early, it can help your business save money and look more professional. If you’re unsure about the process or which VAT scheme to choose, expert guidance can make things even simpler. Feel free to contact us if you need any help!
Author
Mukund Amin
Co-Founder & Director
Mukund is a founding member of the Affinity Associates Group and has been with the practice for nearly 40 years. After completing his degree in Accounting and Finance, he went on to qualify with both ACCA and ICAEW in 1991. Over the years, he’s built deep expertise in consultancy, tax, business development, and corporate group structures. Mukund is known for helping clients make sense of complex financial challenges and turning them into opportunities for sustainable growth.
