If you’re launching a startup or small business in the UK, understanding when and how to register for VAT is a crucial step toward staying compliant and managing your finances effectively. In this guide, we break down the essentials to help you determine if VAT registration is required—and how to go about it.
What Is VAT?
VAT (Value Added Tax) is a consumption tax levied on most goods and services sold in the UK. Businesses charge VAT on sales and can usually reclaim the VAT they pay on business-related purchases.
When Do You Need to Register for VAT in the UK?
You must register for VAT if your business meets either of the following conditions:
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Your VAT taxable turnover exceeds £90,000 (as of 2024/25) in any rolling 12-month period.
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You expect your turnover to exceed the threshold in the next 30 days alone.
What Counts as VAT Taxable Turnover?
VAT taxable turnover includes the total value of everything you sell that isn’t exempt from VAT. This typically includes:
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Goods and services you sell in the UK
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Hired or loaned goods
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Business goods used for personal reasons
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Commission
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Zero-rated items (still count toward the threshold)
Voluntary VAT Registration
Even if your turnover is below the threshold, you can choose to register voluntarily. This can be beneficial if:
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You deal with VAT-registered suppliers or clients (you can reclaim VAT on expenses)
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You want to appear more established or professional
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You plan to grow quickly and want to avoid penalties for late registration
How to Register for VAT
Registering for VAT is a straightforward process. You can do it online via the HMRC website. Once registered, you’ll receive a VAT number and be required to:
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Charge VAT on applicable goods and services
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Submit quarterly VAT returns
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Keep proper VAT records and a VAT account
What Happens If You Don’t Register?
Failing to register for VAT when you’re required to can lead to:
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Backdated VAT bills
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Financial penalties
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Interest on unpaid VAT
If you’re unsure whether you’ve crossed the threshold, it’s best to consult an accountant immediately.
Need Help with VAT Registration?
At Clear Accounting, we help startups across the UK navigate VAT registration, compliance, and returns. Whether you’re unsure about your turnover or need help setting up your VAT account, our experienced team can guide you every step of the way.
Ready to talk VAT? Contact us today and make your startup VAT compliant—without the stress.
