VAT registered vs not registered

Once you pass the threshold you must register, but below it the choice is yours. Here is how to weigh up registering early against staying unregistered.

You must register for VAT once your taxable turnover passes the threshold, currently 90,000 pounds in any rolling twelve month period. Below that, registering is voluntary, and whether it helps depends on who your customers are and what you buy.

Here is a balanced view so you can decide, and we are happy to run the numbers for your business.

Staying unregistered

Simpler, and cheaper for consumer customers.

No VAT to add to your prices
Less admin and no VAT returns
Better for selling to the public who cannot reclaim VAT
You cannot reclaim VAT on your costs
You must register once you pass the threshold
Can look smaller to business customers

Registering for VAT

Reclaim VAT, look established, good for B2B.

Reclaim VAT on your purchases and costs
Looks established to business customers
Schemes like the Flat Rate Scheme can simplify it
Necessary once you pass the threshold anyway
You must add VAT to your prices
Quarterly returns and Making Tax Digital
Can raise prices for consumer customers

When staying unregistered tends to suit you

Staying unregistered often suits you when you sell mostly to the public or other unregistered customers who cannot reclaim VAT, and you have low VATable costs. Adding VAT would simply make you more expensive.

When registering for vat tends to suit you

Registering can suit you when you sell mainly to VAT registered businesses, who can reclaim the VAT, or when you have significant VATable costs to reclaim. It can also help you look established. Once you pass the threshold it is required anyway.

The honest answer

If most of your customers are the public, staying unregistered until you must register is often best. If you sell mainly to businesses, or you have large VATable costs, voluntary registration can pay off. The numbers and your customer mix decide it, so it is worth a quick review before you choose.

Frequently asked questions

What is the VAT registration threshold?

You must register once your taxable turnover passes 90,000 pounds in any rolling twelve month period, or if you expect to within 30 days. We monitor this for clients.

Should I register voluntarily?

It can pay off if you sell mainly to VAT registered businesses or have high VATable costs. If you sell to the public it often does not. We can run the numbers.

What is the Flat Rate Scheme?

A simplified VAT scheme where you pay a fixed percentage of turnover, which can reduce admin and sometimes the bill. We check whether it suits you.

Does VAT registration mean more admin?

Yes, quarterly returns under Making Tax Digital, but good cloud bookkeeping makes it almost automatic, and we handle the returns.

VAT service When to register for VAT Start your quote

Not sure which is right for you?

Tell us a little about your situation and we will give you a straight, no obligation steer, then a fixed fee if you want us to handle it.

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