Value Added Tax (VAT) is a tax applied to most goods and services in the UK. It’s included in the price you pay, and businesses collect VAT from customers on the government's behalf. This means:
- When your business sells goods or services, you charge VAT to your customers (output tax).
- When you purchase goods or services for your business, you pay VAT to your suppliers (input tax).
If you collected more VAT than you paid, you pay the balance to HMRC. If you paid more than you collected, you can reclaim the difference.
The current VAT registration threshold is £90,000. If your turnover is getting close to that limit, or you’re thinking about growing your business, now’s a great time to take a fresh look at your VAT situation.
Current VAT Rates
- Standard rate (20%) – Most goods and services.
- Reduced rate (5%) – Home energy and some energy-saving products.
- Zero rate (0%) – Most foods, children’s clothes, and books.
- VAT Exempt – Insurance & finance, education, healthcare.
If you are a sole trader with more than one business, the total combined turnover from all your businesses counts toward the VAT registration threshold.
You are legally required to register for VAT if:
- Your taxable turnover exceeds £90,000 in any rolling 12-month period, or you anticipate exceeding the threshold within the next 30 days.
- Taxable turnover includes goods and services subject to VAT at 0%, 5%, or 20%. It does not include VAT-exempt income such as health, education, or insurance services.
If you are a non-UK business supplying goods or services in the UK, you must register regardless of turnover.
VAT returns are typically submitted quarterly and must be filed digitally with HMRC.
We can assist with all aspects of VAT compliance, from registration to preparing and submitting your digital VAT return.
UK VAT filing dates are typically one month and seven days after the end of your accounting period. For example, if your quarterly VAT accounting period ends on 31 March, your VAT return and payment will be due by 7 May.
