When does a limited company need to register for VAT?
Last updated · General guidance, not legal or tax advice
A limited company must register for VAT if its VAT-taxable turnover for the last 12 months has gone over the VAT registration threshold, or if it expects to go over the threshold in the next 30 days alone. It can also choose to register voluntarily below the threshold.
The threshold is set by the government and has changed over time, so always check the current figure on GOV.UK's VAT thresholds page rather than relying on a number you have seen elsewhere.
How does the compulsory registration test work?
There are two main tests:
- Looking back — if your VAT-taxable turnover for any rolling 12-month period goes over the threshold, you must register. It is a rolling 12 months, not the tax year or your accounting year.
- Looking forward — if you expect your VAT-taxable turnover to go over the threshold in the next 30 days alone, you must register straight away.
There are deadlines for registering once you go over, and penalties for registering late. See GOV.UK: when to register.
What counts as VAT-taxable turnover?
Broadly, the total value of everything you sell that is not exempt from VAT — including zero-rated sales. Exempt sales (for example some financial, insurance or education services) do not count. The detailed rules are in GOV.UK: calculate your VAT taxable turnover.
Different rules can apply in some situations, for example businesses based outside the UK or selling certain goods.
Should I register voluntarily?
| Possible advantages | Possible disadvantages |
|---|---|
| You can usually reclaim VAT on business costs | You must add VAT to your prices for taxable sales |
| Some business customers expect suppliers to be VAT-registered | Customers who cannot reclaim VAT (for example consumers) effectively pay more |
| You are ready if you grow past the threshold | More admin: VAT returns and Making Tax Digital records |
Voluntary registration often suits businesses that mainly sell to other VAT-registered businesses, or that have significant VAT on their costs. It often suits less well businesses that sell mainly to consumers.
Are there different VAT schemes?
Yes. Schemes such as the Flat Rate Scheme, Cash Accounting and Annual Accounting can simplify VAT for smaller businesses, each with eligibility rules. Your sector matters too: rates and exemptions vary by type of goods or service. An accountant can tell you which, if any, suits you.
What happens once I'm registered?
- You receive a VAT number and an effective date of registration.
- You charge VAT on taxable sales from that date and show it on invoices.
- You keep digital records and file VAT returns, usually quarterly, under Making Tax Digital.
- You pay any VAT due by the deadline.
VAT mistakes can be costly. For ongoing accounting support with VAT registration and returns, In Front Accounting can help. See also what taxes a company pays.
In short
A UK limited company must register for VAT if its VAT-taxable turnover over any rolling 12-month period goes over the registration threshold, or if it expects to go over the threshold in the next 30 days alone. VAT-taxable turnover includes standard, reduced and zero-rated sales but not exempt sales. The threshold changes over time, so check the current figure on GOV.UK. A company can register voluntarily below the threshold, which can make sense if it sells mainly to VAT-registered businesses or has significant VAT on costs, but less so if it sells mainly to consumers. Once registered, it charges VAT, keeps digital records and files VAT returns under Making Tax Digital.
Frequently asked questions
Is the VAT threshold the same as the tax year?
No. The test uses any rolling 12-month period, not the tax year or your company's accounting year.
Can I deregister later?
You may be able to deregister if your taxable turnover falls below the deregistration threshold, which is set separately. Check GOV.UK.
Sources and official guidance
- GOV.UK: VAT registration
- GOV.UK: When to register for VAT
- GOV.UK: VAT registration thresholds
- GOV.UK: Calculate your VAT taxable turnover
This guide is general information about UK rules as at 3 October 2026. It is not legal, tax or financial advice.