VAT Registration Threshold: Should You Register Voluntarily?

In the UK, if your VAT-taxable turnover exceeds £90,000 (2024/25), you must register for VAT with HMRC. However, many businesses choose to register voluntarily before they hit the threshold. Whether that’s the right move depends on your business model, client base, and cash flow.

VAT (Value Added Tax) is a tax added to most goods and services sold in the UK. If you’re VAT-registered, you:

• Charge VAT on eligible sales (output tax)
• Reclaim VAT on eligible purchases (input tax)
• Submit VAT returns (usually quarterly) to HMRC

The standard VAT rate is 20%, but there are reduced (5%) and zero-rated (0%) goods too.

• £90,000 turnover over any 12-month rolling period (not just your financial year)
• You must register within 30 days of going over this threshold
• You can also register voluntarily if under the threshold

Registering before you hit the threshold can have advantages, but also potential drawbacks. Let’s weigh them up:

• Claim back VAT on purchases (e.g. equipment, rent, software)
• Appear more credible to other VAT-registered businesses
• Support long-term growth planning
• Build in systems early to avoid stress later

• You must charge VAT on your sales, which could increase prices
• Cash flow can be affected if your customers can’t reclaim VAT
• More admin (filing returns, keeping digital records)
• Quarterly deadlines under Making Tax Digital

• Who are your clients? If your customers are mostly VAT-registered businesses, they can reclaim what you charge. If they’re consumers or small businesses, they may be put off by higher prices
• Are you investing heavily? You may benefit from claiming back VAT on start-up costs or equipment
• Can you handle the admin? Using cloud software like Xero or QuickBooks simplifies submissions.

If your turnover is under £150,000, you may qualify for the Flat Rate Scheme. You charge VAT at 20% but pay a fixed lower percentage to HMRC, which can simplify accounting and sometimes save money.

Learn more at gov.uk

You can register for VAT online at gov.uk.. Once registered, you’ll need:

• A VAT number
• Digital record-keeping
• MTD-compliant software
• To submit returns (usually quarterly)

We advise clients across the UK and overseas on the right time and way to register for VAT. We’ll help you weigh the pros and cons, stay compliant, and manage VAT returns with ease. Our team in Doncaster is here to guide you every step of the way.

Whether you’re approaching the threshold or planning ahead, we’re here to help. Contact A Wigglesworth & Company for clear, tailored guidance.