How to register for VAT UK

Are you struggling to register for VAT in the UK?

VAT registration can make or break your business. If you fail to register VAT, your business will face various issues, including financial penalties, government-imposed disruptions to your operations, reduced business opportunities, and a loss of business credibility.

Don’t hold your business back from achieving its full potential. VAT registration offers many benefits, including enhanced credibility, reclaiming VAT, and improved cash flow.

In this article, we will provide a step-by-step guide on how to register for VAT UK. You will learn when to register, what documents are required, and more.

So, let’s get started.

What is VAT?

VAT stands for Value Added Tax. It is a general consumption tax levied on the value added at each stage of products and services. A Value Added Tax (VAT) is added at each step of production and distribution, starting from when goods and services are first created until they are sold to the final customer.

The amount of VAT a person pays is based on the product’s cost minus any previously taxed material costs of the product. The government doesn’t add VAT on all products and services equally. VAT rates vary from product to product. There are three types of VAT rates in the UK: standard 20%, reduced 5%, and zero 0%.

When is VAT registration required?

Your business’s VAT registration is crucial. If you delay registering VAT, GOVT can hamper your business’s daily activities and even penalize your business for the delay. That’s why you must register your business’ VAT at the right time.

So, what is the right time to register VAT UK?

Threshold Exceeded: You must register for VAT when your total taxable turnover for the last 12 months exceeds £90,000. For example, your VAT taxable turnover amount is £99,000 between 6 January 2023 and 5 January 2024. In this case, you must register VAT by 28 February.

Future Turnover: If you think your business’s taxable turnover in the next 30 days will cross £90,000, then you must register for the VAT. Let’s say you get a £98,000 contract on 1 January to provide service and will be paid on 30 January. In this case, you must register for VAT on 30 January.

Non-UK Businesses: You must register for VAT if you and your business are based outside the UK. Moreover, if you supply any goods or services to the UK, you must register for VAT.

Benefits of VAT registration

What comes to your mind when you think of VAT?

The government is taking away your money!

No! VAT gives your business many benefits. It gives you more value than the money you give as VAT. Here are some of the benefits of VAT registration;

Boost business credibility

The second name of the business is trust. Without customer trust, your business can’t reach its full potential. When your business registers for VAT, it looks more trustworthy. As a result, customers and partners feel confident about your business.

VAT reclaiming

One of the best advantages of VAT registration is you can reclaim your paid VAT. If your input VAT is more than the output VAT, you can reclaim your paid input VAT. It can significantly reduce your business operation cost and boost your profit margin.

Boosting cash flow

When you pay VAT, you charge more for your services and products. It increases your business’s cash flow, which benefits businesses with fluctuating revenue streams.

Improving business image

VAT registration improves your business image significantly. If your business is VAT registered, it means your business’s economic turnover is more than £90,000. Hence, it makes your small business look like a corporation.

Moreover, some businesses prefer to work with VAT-registered businesses. Therefore, VAT registration can increase your business size.

Required information for VAT registration

To register your VAT, you need a particular set of information. Information requirements depend on the business type. You will need one kind of information for a limited company. On the other hand, if you are a solopreneur, you will need different types of information.

Required information for limited companies:

Company’s registration number
Business’s bank account details
Your Unique Taxpayer Reference (UTR)
Your annual turnover details

These are the must-have information for business VAT registration. However, HMRC may also ask for your self-assessment, corporation tax, and PAYE( pay as you earn). You should collect and keep this information at your disposal.

Required information for individuals or as a partnership:

National insurance number
Identity documents like a passport or driving license
Your bank account details
Your annual turnover details

HMRC may also ask you for a self-assessment return, payslips, and P60. Collect and keep this information so that you can provide them when needed.

How to register for VAT UK: Step-by-step guide

Registering VAT has become super easy, thanks to UK government digital services. You can register VAT online in a few steps. You can also register VAT through a paper form called VAT1. So, let’s register for VAT UK without wasting any more time.

Registering Online

Here is how to register for VAT UK online;

Step One: Open the VAT Registration Page

Open https://www.tax.service.gov.uk/register-for-vat/ on your browser. If you already have an account, sign in using your Government ID and password. If you don’t have one, create one.

Step two: Create a VAT Registration Application

Now, create a VAT registration application.

To do so, first provide an application reference name. For example, you can give it your business name.

VAT Registration application Page by UK Government

Next, accept the declaration and continue. Then, you need to provide some information regarding your business. Here are the information you will need to provide;

1) Where does the business have at least one fixed establishment?

2) What type of business do you want to register for VAT?

3) Is the business applying for the Agricultural Flat Rate Scheme?

4) Will the business do any of the following activities over the next 12 months?

5) Whose business do you want to register?

6) Why do you want to register the business for VAT?

7) It’s selling goods or services and needs or wants to charge VAT to customers.

8) Why do you want to register the business for VAT?

9) Has the business’s taxable turnover gone over £90,000 in any 12 month period?

10) Does the business expect to make more than £90,000 in a single month or a 30-day period?

11) Do you want to voluntarily register the business for VAT?

You can proceed with your VAT registration once you have provided all the necessary information.

Step three: Provide the Required Information

You’ve completed the initial steps, and now it’s time to provide the remaining required information for your VAT application.

First, you need to verify your business. Provide your business registration number and Unique Taxpayer Reference to verify your business.

Next, you need to provide information about yourself, which includes your full name, date of birth, and national insurance number. In addition, you need to provide your address and contact address.

Then, provide information about your business, which includes business details, business activities, and other business activities.

After that, provide information about VAT registration. Here, you need to give details of the goods and services. Moreover, you need to provide bank account details, registration date, VAT returns, and Flat Rate Scheme.

When you have provided the required information, double-check for errors. Once you think everything is correct, submit the application.

Congratulations! You have successfully registered for VAT UK.

Registering with a Paper Form

Along with online registration, you can register VAT with a paper form. Here is how to do that;

Step one: Download and Print the VAT1 Form

Download the VAT1 form. Here is how the VAT1 form looks;

Step two: Fill Out the Form

Print the VAT1 form and complete every section with the required information. If you struggle to understand any section of the form, you can get help from HMRC’s helpful notes on completing VAT1 forms.

Step three: Submit Additional Forms if Necessary

You must submit additional forms if you are registering VAT that falls under special criteria. Here are some of the special criteria with forms;

Step four: Send the Completed Form to HMRC

Finally, send the completed form(s) to HMRC and wait to receive your VAT number.

Conclusion

VAT registration is crucial for UK businesses. It can boost your business’s cash flow, image, and credibility. You can register for VAT with the proper documents in a few minutes. Whether you register VAT online or in paper form, ensure that you provide all the necessary information to avoid delays.