What is VAT registration?
VAT registration is signing up with HMRC to charge and account for VAT, compulsory once VAT-taxable turnover passes £90,000 in any rolling 12-month period.
What VAT registration means
There are two tests for compulsory registration:
- Looking back: at the end of any month, if your VAT-taxable turnover for the previous 12 months is over £90,000, you must register within 30 days of the end of that month. Registration takes effect from the first day of the second month.
- Looking forward: if you expect turnover in the next 30 days alone to exceed £90,000, you must register by the end of that 30-day period, with effect from its start.
Taxable turnover includes standard, reduced and zero-rated sales, but not exempt ones. You can deregister if turnover is expected to fall below £88,000. Businesses below the threshold can register voluntarily.
Example
An online shop's rolling 12-month turnover reaches £91,200 at the end of July 2026. It must register by 30 August 2026, and it is VAT registered from 1 September 2026. From that date it must charge VAT on its sales, even if HMRC has not yet issued its VAT number, and adjust invoices once the number arrives.
How to register
Most businesses register online through their HMRC business tax account, or an accountant can register on their behalf. You will need details of your business activities, turnover, bank account and, for companies, the company registration number. HMRC then issues a VAT registration certificate showing your VAT number, your effective date and your return periods.
Why it matters for your business
Registering late does not avoid the tax. HMRC will charge VAT on sales from the date you should have registered, plus penalties, and you may not be able to recover it from customers. Track your rolling turnover every month as you approach the threshold.
Once registered you must issue VAT invoices, keep digital records, file VAT returns through Making Tax Digital software and pay the VAT due. You can also reclaim input VAT on business costs, including VAT on goods bought up to four years before registration and services up to six months before, if they are used in the business. Cloudkeepers handles VAT registration for clients and advises whether voluntary registration makes sense.
Common questions
It can make sense if most of your customers are VAT registered, because they can reclaim the VAT you charge, and you can reclaim VAT on your own costs. It usually does not make sense if you sell mainly to consumers, because your prices would rise by up to 20% or your margin would fall.
Most online applications are processed within a few weeks, although some are delayed for further checks. You must start charging VAT from your effective date of registration even if you are still waiting, so raise invoices showing that VAT will be added once your number arrives.