How to Register for VAT: A Step-by-Step Guide for Limited Companies

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Last updated 23 October 2026. Written by the Limited Company Accountant UK team, part of Accotax. Figures are for the 2026/27 tax year; always check GOV.UK for the latest rates.

Short answer: You must register for VAT if your taxable turnover goes above £90,000 in any 12-month period, or if you expect to exceed it in the next 30 days. You register online with HMRC, normally within 30 days of the end of the month in which you crossed the threshold, and you can register voluntarily below that level.

Key facts

Compulsory threshold	£90,000 over a rolling 12 months
Deregistration threshold	£88,000
Deadline to register	30 days after the end of the month you cross
Standard rate	20%
Return and payment	1 month and 7 days after the period end

When you must register

There are two tests for compulsory VAT registration. The historic test looks at your taxable turnover over the last 12 months, on a rolling basis, not the tax year. If it exceeds £90,000 at the end of any month, you must register within 30 days of the end of that month, and your registration takes effect from the first day of the second month after you crossed.

The future test asks whether you expect your turnover to exceed £90,000 in the next 30 days alone. If yes, you must register straight away, by the end of that 30-day period. The second test applies to a large one-off contract, so it is worth thinking about before you accept it.

Voluntary registration

You can register for VAT before you reach the threshold. Many businesses do this to reclaim VAT on start-up costs, or because their customers are VAT-registered and can reclaim it, so they do not mind paying it. A VAT number can also help a young business look established.

The downside is that if your customers are consumers who cannot reclaim VAT, your prices will rise by 20% or your margins will shrink. So voluntary registration works best for business-to-business companies.

What you need before you register

Gather the following information before starting the online application. You need your company’s registration number and details of the business, your estimated turnover for the next 12 months, the date you want to register from, your bank account details and your Unique Taxpayer Reference. If you are registering late, calculate the date you should have registered.

You also need a Government Gateway user ID, which you can create when you register for Corporation Tax. If you have an accountant, they can register on your behalf with your authority.

The registration process

Follow these steps to register.

1. Sign in to your HMRC business tax account or create one using your Government Gateway details.

2. Choose to register for VAT and enter your business details, including your SIC code, turnover and start date.

3. Choose the scheme you want, such as standard, flat rate or cash accounting.

4. Submit the application, and wait for your VAT registration certificate, which usually takes between 10 working days and a few weeks.

5. Start charging VAT from your registration date, and add your VAT number to your invoices.

Once you have your VAT number, you also need to sign up for Making Tax Digital.

Making Tax Digital and digital records

All VAT-registered businesses must keep digital records and file their VAT returns using Making Tax Digital compatible software. That means your sales and purchases must be recorded in software, and the return is sent from the software to HMRC. Spreadsheets can be used with bridging software.

Choose accounting software that suits your business, and connect it to HMRC after you register. Many software packages are compatible, and your accountant can set it up.

Charging VAT and filing returns

After registration, you charge VAT at the right rate on your sales. Most goods and services are 20% standard rated. Some items are 5% reduced rated, and some are zero-rated or exempt. Make sure you apply the right rate to each sale.

Most companies file quarterly returns, due one month and seven days after the end of the VAT period. You must also pay any VAT due by that date. Late returns and late payments are subject to the points-based penalty system, so diarise every deadline.

Late registration penalties

If you register late, you must pay the VAT you should have charged from the date you should have registered, even if you did not charge it to customers. HMRC may also charge a penalty, based on the amount of tax due and the length of the delay. The penalty can be up to 15% of the VAT due, depending on how late the registration is.

This is why it is important to monitor your rolling turnover. Check it monthly, and ask your accountant to alert you well before you reach £90,000.

Choosing your VAT period and scheme

When you register, you will be given a VAT period, usually quarterly, and a staggered return schedule. If you prefer monthly returns, for example because you get regular repayments, you can ask to change. Think about which accounting scheme suits you before the first return, because it is easier to start on the right scheme than to switch later.

Consider the cash accounting scheme if you wait a long time for customers to pay, the flat rate scheme if your costs are low, and the annual accounting scheme if you prefer a single return a year. Your accountant can help you decide when you register.

What to do in the first month after registering

Update your invoices to include your VAT number and the VAT amount. Set up your accounting software with the correct VAT rates and link it to HMRC for Making Tax Digital. Tell your customers and suppliers about your VAT number. Review your pricing to check whether to add VAT to your prices or absorb it.

Also diarise the first return deadline, and set aside the VAT you collect in a separate savings account, so that the money is there when the payment is due.

Should you register early or wait?

If you are close to the threshold, a prompt decision helps. Check your turnover at the end of every month, and register as soon as you see you will cross £90,000. Registering a little early gives you time to prepare your invoices and software and avoids a late registration penalty. Waiting until the last day leaves no margin for error. If your customers are mainly businesses that can reclaim VAT, early registration costs them nothing and gives you the benefit of reclaiming VAT on your own purchases.

Frequently asked questions

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