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chapter two of six

Registering for VAT

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Small business guides > Quick guide to VAT > Registering for VAT

Registering for VAT

Now that you’ve got a handle on the basics, find out if your business needs to register for VAT and, if so, how to do it and what happens next.

Who needs to register for VAT?

Some businesses have to register for VAT, some aren’t allowed to, and others can choose.

  • Who must register for VAT: Businesses with an annual turnover of more than £85,000. You may be fined if you don’t register (check out the penalties on this page).

  • Who is not allowed to register for VAT: Businesses that sell only VAT-exempt goods and services.

  • Who can choose to register for VAT: Businesses with an annual turnover of less than £85,000.

Benefits of registering for VAT

Once you’re VAT registered, you don’t end up paying VAT on business expenses. You’ll still get charged the VAT-inclusive price when you make the purchase, but you can claim that money back when you file your return with HMRC.

What do I need to register?

To register, you need:

  • a National Insurance (NI) number or your tax identifier

  • details of other businesses you’ve owned within the past two years

  • your business bank account details

If you bought the business, you’ll need to supply records of the sale.

How to register for VAT

It’s easy to register for VAT on your own and it costs nothing. Your best bet is to do it online through the HMRC website. Start the registration process here.

If you need to use a paper form, you can:

VAT accounting scheme types

Most businesses must use standard VAT accounting
You record the VAT collected on each sale and the VAT paid on each purchase, then submit a VAT return to HMRC every quarter.

You may be able to use annual VAT accounting
Some businesses can submit a VAT return once a year, however they are still expected to pay quarterly. Those quarterly payments are based on your last return, or an estimate.

You may be able to join a flat-rate scheme
Certain smaller businesses can skip all the VAT accounting and simply pay a percentage of their turnover as VAT. An accountant or bookkeeper can help you decide if this makes sense for your business. You can see the flat rates for specific industries on this page.

You may be able to use a cash accounting scheme
Under cash basis accounting, you’re assumed to have collected or paid VAT when money changes hands. Under all the other schemes, you’re assumed to have collected or paid VAT as soon as an invoice is raised.

Once you’re registered for VAT

Once you’re registered for VAT you need to:

  • add VAT to your prices

  • issue VAT invoices to your customers

  • file VAT returns and pay any VAT due to HMRC

  • keep digital VAT records and a VAT account

Chapter 3: How to Calculate VAT and issue VAT invoices

If your business is adding VAT to its prices, you’ll need to let your customers know. Find out how to calculate VAT and add VAT onto your invoices and receipts correctly.

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Everything you need to know about VAT in the UK.

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