Starting a new business is challenging, but registering for VAT need not be. This guide is a comprehensive resource on the UK VAT registration process for small businesses. Although VAT registration is free, consulting an accountant is highly recommended to choose the best VAT scheme for your needs.
When Should You Register for VAT?
Every UK business with annual profits exceeding the VAT threshold of £85,000 must register for VAT. Failure to comply may lead to hefty fines and serious penalties. Even if your business is close to the threshold or expects to exceed it within the next 30 days, early registration can be beneficial.
Many businesses register early to reclaim VAT on eligible purchases made (up to 4 years prior) and to enhance credibility by displaying a VAT number on invoices and communications.
TOP TIP: If your business operates from outside the UK but sells goods or services within the UK, you must register for UK VAT.
How to Register for VAT in the UK Step-by-Step
This section provides a comprehensive, step-by-step guide to the UK VAT registration process for small businesses.
Method 1: Online Registration
To register online, first create a Government Gateway ID on the Government Gateway. Once your account is set up, navigate to the “Get another tax, duty or scheme” section and follow the instructions to register for VAT. Be sure to have your National Insurance (NI) number or Unique Taxpayer Reference (UTR), previous business details, and business bank account information ready.
After submission, you will receive confirmation of registration along with your unique 9-digit VAT number. Your accountant can also manage the registration process and advise on the most appropriate VAT scheme for your business.
Method 2: Registration by Post
Download the VAT1 form from the HMRC portal here. Print and fill out the form with your NI number or UTR, previous business details, and your business bank account information.
A helpful guide on completing the VAT1 form is also available on the HMRC portal.
Once completed, mail the form and any additional required documents to HMRC. Registration confirmation should arrive within 30 days.
What Happens Once You Register?
After successfully registering for VAT, you will receive:
- Confirmation of registration
- An Effective Date of Registration
- A unique, 9-digit VAT number (which must appear on all VAT transactions)
Once registered, you must charge VAT on your sales and may reclaim VAT on eligible business purchases from the Effective Date of Registration. In some cases, you may also reclaim VAT on purchases made up to 4 years before registration, provided they relate directly to your business.
TOP TIP: All VAT-registered businesses must now use Making Tax Digital (MTD) for VAT accounting. Record keeping and VAT returns must be submitted using MTD-compatible software, which can be found here.
How Much is VAT in the UK in 2025?
For a detailed breakdown of current VAT rates, please see our Current VAT Rates guide. If your business turnover meets the £85,000 threshold, you are required to register and charge VAT on all sales.
Once registered, you will typically charge the standard rate of 20% on most goods and services and may reclaim VAT on eligible purchases.
Some businesses might qualify for government schemes that allow them to charge a reduced rate. Consult your accountant for more details.
What VAT Schemes are Available?
The world of VAT can be complex, but several schemes are designed to simplify the process:
- Flat Rate VAT Scheme – Ideal for businesses with annual profits under £150,000, this scheme allows you to pay a fixed percentage that is often lower than the standard 20%. See Flat Rate VAT Scheme.
- Annual Accounting Scheme – For businesses with annual profits under £1.35 million, this scheme permits one VAT return per year while paying quarterly instalments. It can be combined with the Flat Rate VAT Scheme.
- Cash Accounting Scheme – Also available for businesses with annual profits under £1.35 million, this scheme records income when received and expenses when paid.
Key Takeaways
- VAT registration is mandatory for businesses exceeding the £85,000 threshold.
- Early registration can help reclaim VAT on prior purchases and boost your business’s credibility.
- Follow this comprehensive, step-by-step guide to ensure a smooth UK VAT registration process.
- Choose the VAT scheme that best suits your business needs—consult an accountant for expert advice.
- Use Making Tax Digital (MTD) compatible software for efficient VAT record keeping and reporting.
In Summary
This guide has provided a detailed, step-by-step look at how to register for VAT in the UK in 2025. Whether you choose online registration or the postal method, ensure you have all the required details on hand and consult with your accountant to choose the best VAT scheme for your business.
For further reading, check out our related articles on What is VAT? and Current VAT Rates.