Guides
VAT Registration and Returns: A Practical Guide
When to register for VAT, choosing between standard, flat-rate and cash schemes, filing returns under MTD, and the rules every UK business needs to know.
Quick answers
When do I need to register for VAT?
You must register for VAT if your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period, or if you expect to exceed £90,000 in the next 30 days alone. You can also register voluntarily below the threshold.
How often do I file a VAT return?
Most VAT-registered businesses file quarterly returns under Making Tax Digital. The return and any payment are due 1 month and 7 days after the end of the VAT period. The Annual Accounting Scheme allows just one return a year for stable businesses.
What is the Flat Rate Scheme?
The Flat Rate Scheme is a simplified VAT scheme for businesses with VAT-taxable turnover under £150,000. You pay a fixed percentage of your gross (VAT-inclusive) turnover to HMRC and don't reclaim input VAT on most purchases — making bookkeeping much simpler.
VAT Registration and Returns
VAT is a tax on the sale of most goods and services. You charge it to your customers (output tax) and reclaim it on most business purchases (input tax). The difference is paid to or refunded by HMRC.
When you must register
You must register for VAT if:
- Your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period, OR
- You expect to exceed £90,000 in the next 30 days alone, OR
- You take over a VAT-registered business as a going concern.
You can also register voluntarily below the threshold — useful if your customers are mainly VAT-registered businesses or if you have a lot of input VAT to reclaim.
The deregistration threshold is £88,000.
VAT rates
- Standard rate: 20% (most goods and services).
- Reduced rate: 5% (domestic energy, child car seats, some renovations).
- Zero rate: 0% (most food, children's clothing, books, public transport).
- Exempt: insurance, finance, education, health (no VAT charged, no input VAT reclaimable on related costs).
Choosing a scheme
| Scheme | Best for | Notes |
|---|---|---|
| Standard accounting | Most businesses | Reclaim input VAT in full |
| Flat Rate Scheme | Turnover under £150k | Pay fixed % of gross turnover; simpler |
| Cash Accounting | Cash-flow tight | Account for VAT when paid, not invoiced |
| Annual Accounting | Stable turnover | One return a year + interim payments |
Filing under MTD
All VAT-registered businesses follow Making Tax Digital:
- Keep digital records of every sale and purchase.
- Use MTD-compatible software (or bridging software with spreadsheets) to submit.
- File quarterly within 1 month and 7 days of the period end.
- Pay any VAT due by the same deadline.
Common pitfalls
- Forgetting that rolling 12 months, not financial year, triggers registration.
- Charging VAT before HMRC issues your VAT number (you can recover it later but invoicing rules differ).
- Mixing standard-rated and zero-rated sales without proper records.
- Reclaiming input VAT on entertainment or personal items.
This is general guidance for the 2025/26 UK tax year and is not personal tax advice. Always check the latest figures on GOV.UK or speak to a qualified accountant for your situation.
Frequently asked questions
Related guides
Example: VAT Return on the Flat Rate Scheme
A worked example of a quarterly VAT return for a small UK consultancy on the Flat Rate Scheme in 2025/26.
Example: MTD VAT Submission Walkthrough
Step-by-step example of preparing and submitting a Making Tax Digital VAT return using accounting software.
Making Tax Digital (MTD) Explained
What MTD means for VAT and Income Tax, who's affected, when the rules apply, and how to choose compatible software.
Reference: UK Allowances and Thresholds 2025/26
Personal allowance, trading allowance, AIA, dividend allowance, VAT threshold and other key UK tax allowances for 2025/26.