How to register for VAT

Need to register your business for VAT? Learn how to stay tax compliant in your future trading using this article and find out how to register for VAT.

We’ll also cover the key questions related to VAT for new business owners, including:

• When do businesses need to register for VAT?
• How do I register for VAT?
• What should I do once registered?
• How to manage your VAT payments easier with Countingup

Whether you’re a sole trader or limited company director, we want to empower new entrepreneurs to make a success of their business ventures. If you’re setting up a new business or expanding an existing one, read on to find out more about registering and managing VAT payments. If you’d like to learn more about VAT before you register, see our other articles on what VAT is and when do you pay VAT?

Businesses must register for VAT if their taxable turnover is over £85,000. This figure may be referred to as ‘the threshold’ by HMRC or your accountant during the registration process.

VAT taxable turnover is the total amount of money your business makes from items that are not exempt from VAT. Depending on your business, you may be eligible to avoid adding VAT to your prices. If your business offers some VAT exempt items, make sure your VAT-taxable turnover calculations take account of them and only use the turnover that you should be paying added VAT for. 

If you know your turnover will pass the threshold in the next 30 days, or if your turnover from the last 12 months has already passed it, HMRC requires you to register for VAT.

You must register for VAT by the end of the same 30-day period. When calculating your new VAT figure for future trading, HMRC states you must use the date of your registration and not the date your turnover went over the threshold.

You must register within 30 days of the end of the month in which you went over the threshold. When calculating your new VAT figure for future trading, HMRC specifies to use the first day of the second month after you go over the threshold.

Businesses can register for VAT with HMRC using the online portal. 

This will create a VAT online account (sometimes referred to as a ‘Government Gateway account’) which you can use to submit your VAT returns each year.

Some businesses may have to register by post using the VAT1 form. For example, if you’re applying for a registration exception (if you sell goods entirely exempt from VAT) or joining the Agricultural Flat Rate Scheme (if your business is in agriculture, you may be eligible for a flat tax rate). Similarly, if you import or ‘acquire’ goods to Northern Ireland worth more than £85,000 from an EU country (like the Republic of Ireland), you should register for VAT by post using VAT1B. 

Generally, when registering, you’ll need to provide some details about your business to HMRC. These will include your business’ turnover, bank details and activities (what it does to make a profit). 

This will help HMRC decide whether your submitted VAT returns are correct as you may exclude certain items from your VAT calculations across the year. It may also help to have a dedicated bank account for your business if you are a sole trader as it can help your VAT calculations be more accurate and transparent. Find out more below.

If you sell goods across the UK to Northern Ireland, you may have to provide additional details to HMRC. This can help your business use simplified VAT rates when you trade with EU customers or businesses. In these cases, you need to tell HMRC if any of the following apply:

• Your goods are in Northern Ireland at the time of sale
• You receive goods in Northern Ireland from VAT-registered EU businesses for any business purposes
• You sell or transport goods from Northern Ireland to an EU country

You should get a VAT registration certificate within 30 working days of applying; however, this may take slightly longer. Your VAT certificate will either be sent to your online account or postal address, depending on which method you registered with.

Importantly, your business begins paying VAT to HMRC from the date specified on your certificate as your ‘effective date of registration’.

Each time you submit a VAT return to HMRC, you should use the nine-digit VAT number listed on your VAT certificate. This reference helps HMRC track your business’ VAT payments and make sure you stay tax compliant.

Tracking VAT rates across your business’ accounts can be time-consuming and frustrating. You can use the Countingup app to save time and stress on your financial admin. 

Countingup is the business current account and accounting software in one app and provides a digital tax filing service. With it, you can automate VAT calculations associated with each of your business transactions and make paying your VAT bill easier. Countingup also makes sharing your business’ finances and VAT records with your accountant as easy as the touch of a button. 

The Countingup app also offers real-time profit and loss statements, automated invoicing tools and expense reminders, complete with a receipt capture system. With these features, you can make sure your accounts are always up to date and accurate.

Gain more insight into your business’ performance and stay tax compliant while trading. 

Find out more about Countingup here and sign up for free today.