When you have to register
You must register for VAT if your taxable sales go over £90,000 in any rolling 12 months, or if you expect them to go over £90,000 in the next 30 days on their own. It’s a rolling test, not your financial year, so check it every month as you get close. You can deregister if sales fall below £88,000.
You can also register voluntarily below the threshold. That can make sense if your customers are VAT-registered businesses and you buy a lot of equipment or stock.
VAT rates
| Rate | Used for |
|---|---|
| 20% standard | Most goods and services |
| 5% reduced | Some items, such as domestic fuel and power |
| 0% zero | Most food, children’s clothes, books |
Schemes that can help
- Flat Rate Scheme: you pay a fixed percentage of your gross sales instead of working out VAT on every cost. If you spend very little on goods, a 16.5% “limited cost trader” rate applies, which often makes it poor value.
- Cash Accounting: you pay VAT when your customer pays you, not when you invoice. Useful if customers pay late.
- Annual Accounting: one return a year with advance payments through the year.
Making Tax Digital for VAT
Every VAT-registered business has to keep digital records and file returns through software. Returns are usually quarterly and due one month and seven days after the quarter ends, which is also when the payment is due.
Mistakes we see most often
- Missing the registration deadline because sales were checked by financial year, not a rolling 12 months
- Claiming VAT on costs without a valid VAT invoice
- Reclaiming VAT on entertaining clients, which isn’t allowed
- Builders not applying the construction reverse charge correctly
- Staying on the Flat Rate Scheme after it stopped saving money
Common questions
Do I have to register for VAT?
Once your taxable sales go over £90,000 in any rolling 12 months, or you expect them to in the next 30 days, yes.
How often do I file VAT returns?
Usually every quarter, through Making Tax Digital software. The return and payment are due one month and seven days after the quarter ends.
Is the Flat Rate Scheme worth it?
It depends on what you spend. If you buy very little in goods you’ll pay 16.5%, which often costs more than standard VAT accounting. We check it for you.
This guide is general information, correct as of November 2026. Rules change and every situation is different, so speak to us before acting on it.