When to register for UK VAT

If you're unsure about whether to register for VAT, this guide will help to answer many of your questions. It explains when you must register and also when you can register voluntarily, and why you might benefit from voluntary registration.

It also explains:

  • the circumstances in which you don't need to register
  • the circumstances in which you can't register
  • when to register if you do business internationally

On this page:

Who can and can't register for VAT

Who can register for VAT

You can register for VAT if you're in business and you are one of these:

  • an individual
  • a partnership
  • a company
  • a club
  • an association
  • a charity
  • any other organisation or group of people acting together under a particular name, such as an educational or health institution, exhibition, conference, etc
  • a trust
  • a Local Authority

For VAT purposes, the individual or organisation that is in business is known as a 'taxable person'.

Who can't register for VAT

You can't register for VAT if either of these is true:

  • you sell only goods or services that are exempt from VAT
  • you aren't in business according to the definition that HM Revenue & Customs (HMRC) uses for VAT purposes

Find out more about exempt and partially-exempt businesses for VAT purposes

What is business for VAT purposes?

You can only register for VAT if you're in business. HMRC defines a business as a continuing activity involving getting paid for providing goods or services - in money or another form of payment such as in-kind or barter.

You are in business when, for example:

  • you earn an income by carrying on a trade, vocation or profession - by being self-employed or through another entity such as a limited company
  • you provide membership benefits as a club, association or similar body in return for a subscription or other form of payment
  • you provide certain other activities as a club or other recreational body, charity or other non-profit making body
  • you charge admission to a premises

To be in business, these activities must have a degree of frequency and scale and be continued over a period of time.

Even if your activities have some or all the characteristics of a business, they may not be considered a business for VAT purposes if they are essentially a recreation or hobby, or an isolated transaction. So if you only make occasional VAT taxable supplies, or your supplies are minimal, it may be that you don't need to register for VAT. The one-off or infrequent sale of your personal belongings at a car boot sale or auction, for example, would fall into this category - but buying goods for resale on a regular basis is definitely a business activity.

Contact HMRC for advice on VAT registration

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You're doing business in the UK, or intend to start

If your place of business is in the UK or you live here

You may need to register for VAT, or you may be able to choose to register voluntarily, if you are doing any of the following kinds of business in the UK:

  • Supplying goods or services within the UK. If your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold of £79,000, or you expect it to go over that figure in the next 30 days alone, you must register for VAT. However, if your turnover has gone over the registration threshold temporarily then you may be able to apply for exception from registration - see the section later in this guide for more information.
    There is a section later in this guide on calculating your VAT taxable turnover.
  • Taking over a VAT-registered business from someone else. You have to add your own VAT taxable turnover over the last 12 months (if any) to that of the business you're taking over. If the total goes over the registration threshold on the day of the takeover (currently £79,000), you'll have to register. However, if your turnover has gone over the registration threshold temporarily then you may be able to apply for exception from registration see the section later in this guide for more information.
  • Receiving goods from other countries in the European Union (EU).If you have received goods from other EU countries in the UK (these are known as acquisitions) with a total value greater than £79,000 in the current year since 1 January, or you expect to acquire more than that value in the next 30 days alone, you must register for VAT.
  • Supplying goods or services from the UK to other countries. See the section in this guide on supplying goods or services from the UK to other countries.
  • Supplying goods or services to the UK from other countries. See the section in this guide on supplying goods or services to the UK from other countries.

If your trading is below the threshold for registration

If you're carrying out one or more of the business activities described above but you haven't crossed the registration threshold, you can still apply to register for VAT voluntarily - it might be of benefit to you. See the section in this guide on voluntary registration. In any case, you should regularly check your turnover to see if you need to register.

If you've gone over the threshold for registration temporarily

You can apply for exception from registration if:

  • you have to register for VAT because the value of your taxable supplies in the previous 12 months has exceeded the registration threshold of £79,000 (including the value of supplies made by a VAT-registered business that you have taken over)
  • you can demonstrate to HMRC that in the longer term you will only be trading below the de-registration threshold of £77,000

You can ask HMRC if they can make an exception, and allow you not to register for VAT, by sending them a letter, stating why you are applying for an exception. The letter should provide evidence and explain why the value of your taxable supplies will not go over the deregistration threshold in the next 12 months.

If HMRC agrees to make an exception and allow you not to register this time, you must let them know of any relevant change in circumstances - for example, if your turnover goes over the threshold again.

If HMRC does not agree to make an exception, you will become registered for VAT from the day you should have been registered. You will need to account for VAT from that date.

If you haven't started to trade yet

If you intend to start carrying out one of the business activities described above, you can choose to register for VAT voluntarily. See the section in this guide on voluntary registration.

If you do business in the Isle of Man

Although the Isle of Man is not part of the UK, for VAT purposes you should add together the value (or estimated value) of VAT taxable supplies made in both the UK and the Isle of Man to work out if you need to register. See the section in this guide on calculating your taxable turnover for other supplies you may need to consider.

If you don't live in the UK or your place of business isn't in the UK

From 1 December 2012 the UK VAT registration threshold will no longer apply to you.

Your registration date will be the earliest date that either:

  • you make any taxable supplies here
  • you expect to make any taxable supplies here within the next 30 days.

You must register as a Non-Established Taxable Person (NETP). You may also want to appoint a tax representative or agent to keep VAT records and accounts on your behalf - that's up to you.

Find out how to register for VAT if you're an NETP

Find out more about taking over a business and VAT registration

Read more about historical VAT registration thresholds in Supplement to Notices 700/1 and 700/11

Read more about the VAT registration threshold for NETPs in Revenue & Customs Brief 31/12

Find out how to appoint someone to deal with your VAT affairs

Find out how to register for VAT

Read about late VAT registrations

Get more information about exemption from registration in Notice 700/1

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You supply goods to the UK from abroad, or intend to start

You may need to register for VAT, or you may be able to choose to register voluntarily, if you are doing any of the following kinds of business in the UK:

  • Supplying and delivering goods from another EU country to non VAT-registered customers in the UK. If you sell and deliver goods (or arrange for their delivery) from another EU country to customers in the UK who aren't registered for VAT and don't have to be registered, this is known as distance selling. Common examples are mail order and Internet sales. If the value of your distance sales in the calendar year from 1 January goes over the distance selling threshold, currently £70,000, you must register for UK VAT. You can also register voluntarily, if you are trading below the threshold or you intend to start trading.
  • Supplying goods on which an 8th or 13th Directive claim has been made or is going to be made. In certain circumstances you have to register if you sell, supply or otherwise dispose of an asset on which someone has claimed - or intends to claim - an 8th or 13th Directive refund. More information is below.
  • Supplying and delivering excise goods from another country. If you sell and deliver goods from another country that are liable to UK Excise Duty (such as tobacco or alcohol) to UK customers, then you must register for VAT in the UK. There's no threshold - everyone must register.

Find out more about distance selling into the UK from other EU countries

Find out how to register for VAT

If you don't have a place of business in the UK or live here

If you have to register for one of the reasons described above, but you don't live in the UK or have a place of business here, then you must register as a Non-Established Taxable Person (NETP). You may also want to appoint a tax agent or representative to keep VAT records and accounts on your behalf - that's up to you.

Find out how to register for VAT if you're an NETP

Disposing of assets on which 8th or 13th Directive refunds have been claimed

The 8th Directive allows someone registered for VAT in one EU country to reclaim VAT they've paid in another EU country. The 13th Directive allows businesses established outside the EU to reclaim VAT paid within the EU.

You'll have to register for VAT if you claimed, or intend to claim, a repayment under either of these Directives on goods, and both the following apply:

  • the goods are business assets - or are incorporated into business assets
  • you make a VAT taxable supply of those goods, or intend to make one in the next 30 days

You'll also have to register if the repayment was claimed by someone who then transferred the assets to you under the Transfer of a Going Concern provisions. This applies even if assets were transferred more than once - you may have to check back several transfers.

There's no registration threshold. For any disposal of these assets in the circumstances outlined above, you must register.

Find out how to register for VAT

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You supply goods or services from the UK to other countries

If you supply goods and services both inside and outside the UK, then you may need to register for UK VAT if the value of your UK supplies alone exceeds the registration threshold.

You don't need to include supplies you make in other countries when calculating your VAT taxable turnover for registration purposes - so leave out of your calculation any goods and services you supply where the place of supply is another country rather than the UK.

Find how to work out your place of supply of services for VAT

Distance selling

If you supply and deliver goods - or have them delivered, for example by mail or another delivery service - to customers in other EU countries who are not registered for VAT and don't have to be registered, this is known as distance selling. If you are required to register and account for VAT on distance sales in another EU country then you don't include the value of those distance sales when working out whether you need to register for UK VAT.

Find out whether you need to register for VAT in other EU countries

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Voluntary registration

Benefits of voluntary registration

There are potential cashflow advantages of being able to charge VAT on your sales and claim back VAT on your purchases, which you may benefit from depending on your circumstances. For example:

  • if you sell zero-rated items and buy standard-rated items you would receive a VAT refund from HMRC
  • if you have not yet sold anything or don't sell anything during a VAT accounting period, you may still be able to claim VAT back on your purchases

If you're thinking about registering voluntarily, you might want to check the rules for reclaiming VAT on purchases made before registration since it is often possible to reclaim some of the VAT you are charged on goods or services that you use to set up your business.

You can apply to backdate your voluntary VAT registration by up to four years. You will have to account for VAT on any VAT taxable supplies you've made after your chosen date, and you won't be able to reclaim any VAT on your purchases unless you have the right evidence, and meet the other conditions for reclaiming VAT.

Find out about reclaiming VAT on goods purchased before registration

Responsibilities of voluntary registration

If you decide to voluntarily register for VAT, you have exactly the same responsibilities as someone who must register. You must keep all required VAT records and issue VAT invoices. You also have to complete and submit a VAT Return at regular intervals, along with your payment if one is due.

Get information about keeping records and accounting for VAT

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Calculating your VAT taxable turnover

Your VAT taxable turnover includes the value of any goods or services you supply within the UK, unless they are exempt from VAT. This means you must also include any supplies you make that would be zero-rated for VAT.

When calculating your VAT taxable turnover you will of course include your sales, but for VAT purposes, you should also include the value of certain other types of supply:

  • goods or services that you exchange or barter - see the link below
  • supplies of certain services that you receive from suppliers in other countries that you have to 'reverse charge' - see the links below
  • where you use your own labour to construct certain building or civil engineering works for your own business use with an open market value of £100,000 or more - see the link below

You must not attempt to avoid registration by artificially separating business activities to reduce your turnover. See the section in this guide on artificial separation.

Go to Notice 741A to find more about reverse charge services in Section 18

Read more about samples, part exchanges, barters, contras and VAT

Find out what construction services are considered self-supply for VAT purposes in Notice 708

If your VAT taxable turnover is below the threshold

You might be charged a penalty if you register for VAT late, so you should check both of these from time to time:

  • the current registration threshold - this changes regularly, and is usually announced in the Budget
  • your turnover over the previous 12 months to see if it is above the threshold, or if you can expect it to go above the threshold soon

If you took over another VAT-registered business within the last 12 months, then when you regularly check your turnover for the previous 12 months against the threshold, you should take into account the turnover of the business before you bought it as well as your own turnover.

If most or all of the goods and services you supply are zero-rated

If most of your supplies are zero-rated, you may be able to apply for exemption from registration.

You can apply for an exemption from VAT registration online or by completing a paper VAT registration form. If some of the supplies you make are VAT taxable you must also show that the VAT you would reclaim on your purchases would normally be more than the VAT you would charge on your sales.

If HMRC agrees you can be exempt from VAT registration, you must inform HMRC of any relevant change in circumstances - for example, if you no longer sell mainly zero-rated goods or services.

If HMRC doesn't give you an exemption, you will become registered for VAT from the day you should have been registered. You will need to account for VAT from that date.

Read about rates of VAT on different goods and services

Find more about exemption from registration in Notice 700/1

Find out what happens if you register late for VAT

Register for VAT online

Get a paper VAT registration form

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Do not avoid registering for VAT by artificially separating business activities

If you run more than one business, the sales in all those businesses must normally be added together to determine whether or not you must register for VAT.

However, if you are involved in the running of several separate legal entities, you may not need to combine the sales of those businesses to find whether you need to be VAT-registered.

If HMRC decides that you have artificially separated one business into smaller parts to avoid registering for VAT, it can decide that the entire business is a single taxable person and therefore must be registered for VAT. See the description of 'taxable person' in the section in this guide on who can and can't register for VAT.

Situations that HMRC may consider a single taxable person for VAT purposes include:

  • Separate entities selling to registered and unregistered customers. The VAT-registered entity sells only to VAT-registered customers, and the entity not registered for VAT sells to customers who are not registered for VAT.
  • The same equipment or premises being used by different entities on a regular basis. The premises and/or equipment are owned by one of the parties, who charges rent to the others. This situation may occur in businesses such as launderettes and takeaway food operations.
  • Splitting up what is usually a single sale. This is common in industries such as the bed and breakfast trade, where one business supplies the bed and another the breakfast.

If you deliberately avoid registering for VAT, you may be liable to a penalty. For serious offences, the matter will be investigated and you may be prosecuted.

Read about what happens if you don't register for VAT on time

Find out how to register for VAT

Find out more about artificial separation in Statement of Practice F4 (PDF 1.7MB)

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More useful links

Contact the VAT Helpline for advice on VAT registration

Find more about when to register for VAT in Notice 700/1

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