VAT registration is the process of listing your business with the government as active in production and sales.
You must register your business for VAT with HM Revenue and Customs (HMRC) if its VAT taxable turnover is more than £85,000.
You can register voluntarily if your turnover is less than £85,000 unless everything you sell is exempt. You will have certain responsibilities if you register for VAT.
After a business registers for VAT, it can reclaim any VAT paid on company purchases and becomes responsible for:
- Charging VAT on any goods or services sold (and charging the right amount)
- Paying any VAT due to HMRC
- Submitting VAT Returns
- Keeping VAT records and a VAT account
Companies registered for VAT will be issued a unique VAT registration number. This number should be included on sales invoices and is required for the reverse charge procedure for taxable sales between EU countries.
The standard rate of VAT is 20% and some things are exempt from VAT, such as postage stamps, financial and property transactions.
VAT rates for goods and services
| % of VAT | What the rate applies to | |
| Standard rate | 20% | Most goods and services |
| Reduced rate | 5% | Some goods and services, eg children’s car seats and home energy |
| Zero rate | 0% | Zero-rated goods and services, eg most food and children’s clothes |
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