VAT Registration

VAT is a tax that's charged on most goods and services that VAT-registered businesses provide in the UK. The standard VAT rate is currently 20%.

The VAT registration threshold is currently an annualised turnover of £85,000 but this increases to £90,000 from April 2024.

When your turnover goes over this you must register for VAT or you will be liable to penalties and back-dated VAT.

Your turnover is assessed on a 12 month rolling basis so it's important that you keep adequate records for you to be able to keep a track of your monthly turnover.

There could be advantages to registering earlier, including claiming VAT back on your costs and potentially profiting through the Flat Rate Scheme. 

However if your customer base are not VAT registered businesses themselves, your company being VAT registered can cause you commercial pricing issues as you will effectively be more expensive to that customer than your competitor who operates below the VAT threshold. This is particularly an issue where your customers are largely consumers rather than businesses.

We have a separate section in our Knowledge Base for VAT here.