VAT Registration Threshold for UK Small Businesses

If your sales grow, you may reach the VAT registration threshold. Once you register, you can also reclaim the VAT on equipment you buy for the business.

This guide covers the current UK VAT threshold, how to register, and what happens to the VAT on a purchase like a printer.

The Short Version

• You must register for VAT if your taxable turnover for the last 12 months goes over £90,000.
• You must also register if you expect to go over £90,000 in the next 30 days.
• Below £90,000, registration is your choice. This is called voluntary VAT registration.
• Once you are registered, you can reclaim VAT on business purchases through your VAT return, as long as you hold a valid VAT invoice.
• If you use the Flat Rate Scheme, the rules for reclaiming are different.

What Is the UK VAT Registration Threshold?

The UK VAT threshold is £90,000 of taxable turnover. You measure it over the last 12 months.

Taxable turnover is the total value of everything you sell that is not VAT exempt or outside the scope of VAT. It is not your profit.

You have two tests to watch.

• The backward test. Your taxable turnover for the last 12 months goes over £90,000.
• The forward test. You expect your taxable turnover to go over £90,000 in the next 30 days alone.

If either one is true, you must register.

When to Register

If you pass the threshold over the last 12 months, you have to register within 30 days of the end of the month when you went over. Your registration normally starts on the first day of the second month after you went over.

GOV.UK gives an example. If your turnover for the last 12 months reaches £100,000 on 15 July, for the first time, you must register by 30 August.

If your taxable turnover later falls below £88,000, you can ask HMRC to cancel your registration. Check the current figures on GOV.UK before you act, because the thresholds can change.

Do You Need to Register for VAT?

Check three things.

1. Add up your taxable sales for the last 12 months.
2. Look ahead 30 days. If one big order could take you over, the forward test applies.
3. Check what you sell. If everything you sell is exempt from VAT or outside its scope, you do not have to register.

If you are under £90,000 and none of that applies, you do not need to register yet. Keep a monthly record so you spot the threshold early.

Should You Register Before You Reach the Threshold?

You can. This is voluntary VAT registration.

One reason to register early is to reclaim VAT on what you buy. The trade-off is that you must charge VAT on your sales and pay HMRC any VAT you owe from the date HMRC registers you.

Whether it suits your business depends on who you sell to and what you buy. An accountant can run the numbers for you.

How to Register for VAT

You can usually register online with HMRC. If you do not have sign-in details yet, you can create them the first time you sign in. You do not have to finish in one go, because you can save your progress and come back later.

Have these ready.

• Your National Insurance number, or your company registration number if you are a limited company
• An identity document, such as your passport, if you register as an individual
• Your business bank account details
• Your annual turnover
• An estimate of your taxable turnover for the next 12 months

After you register, you get a 9-digit VAT registration number. You must show it on every invoice you raise. HMRC also confirms your effective date of registration and when your first VAT return is due.

What Happens to the VAT on Equipment You Buy?

When you are VAT registered, you can reclaim the VAT on items you buy for use in your business. You do this on your VAT return.

Take the eufyMake E1 Basic Bundle, listed at £2,149 with VAT included. At the 20% standard rate, the price before VAT is about £1,791 and the VAT is about £358. Those figures are an illustration. Your own invoice shows the exact amount.

A few rules from GOV.UK are worth knowing.

• You need a valid VAT invoice. Keep it with your records.
• Business use only. If an item is also for personal use, you can reclaim only the business share of the VAT.
• Purchases before you registered. You can reclaim VAT on goods you still have if you bought them within the last 4 years, and on services within the last 6 months.
• The Flat Rate Scheme. If you use it, you cannot reclaim the VAT on your purchases, except for certain capital assets over £2,000. Ask your accountant which scheme suits you.

You need to keep VAT records for at least 6 years.

How to Check a UK VAT Number

You can check whether a UK VAT number is valid on GOV.UK. The service also shows the name and address of the business the number is registered to. You need the number itself, because you cannot search by business name. You can find a supplier's VAT number on their invoice.

Ready to Start?

Once you know where you stand on VAT, you can plan your equipment with a clear head. Our guide on how to start your UV printing business walks you through the first steps.

Good to Know

This guide is general information. It is not tax or legal advice. VAT rules, rates and thresholds can change. Check the details on GOV.UK or with an accountant before you decide.

FAQs

What is the UK VAT threshold?

You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days.

Do I need to register for VAT as a sole trader?

The £90,000 threshold applies to your business's taxable turnover. If it goes over £90,000, you must register. You register as an individual if you are a sole trader.

Can I register for VAT voluntarily?

Yes. You can choose to register if your turnover is under £90,000. You then have to charge VAT and file VAT returns from the date HMRC registers you.

Can I reclaim VAT on equipment I buy for my business?

If you are VAT registered, you can usually reclaim the VAT on items you buy for business use, on your VAT return. You need a valid VAT invoice. If you also use the item personally, you can reclaim only the business share.

Can I reclaim VAT if I use the Flat Rate Scheme?

No, with one exception. You can reclaim VAT on certain capital assets over £2,000. Ask your accountant which scheme is right for you.