In the UK, you do not have to register for or pay VAT if your taxable turnover is below the £90,000 threshold (as of 2025-26). Mandatory registration is required only if your taxable turnover exceeds £90,000 in a rolling 12-month period or is expected to exceed it in the next 30 days.
You can choose to register for VAT if your turnover is less than £90,000 ('voluntary registration'). You must pay HM Revenue and Customs ( HMRC ) any VAT you owe from the date they register you. You do not have to register if you only sell VAT exempt or 'out of scope' goods and services.
The VAT threshold is the volume of annual turnover at which businesses are required to register for value-added tax (VAT), currently charged at 20 percent. Since April 2024, the UK VAT registration threshold has been £90,000. VAT thresholds for previous years are as follows: 2014–2015 – £81,000.
In the UK, businesses need to register for VAT if their taxable turnover exceeds £90,000 within a rolling 12-month period. This is the current VAT registration turnover threshold set by HMRC, and businesses must monitor their turnover regularly to ensure compliance with VAT registration requirements.
Turnover is calculated after VAT is deducted from income. VAT is not considered part of your business income. In order to get an accurate picture of the turnover of your business you need to exclude VAT from your sales total. Your gross profit/turnover does not include other tax liabilities.
What Is Business Splitting? Splitting a business involves dividing one business into multiple entities to keep each entity's turnover below the VAT registration threshold. Business owners sometimes do this to avoid having to apply VAT and keep individual splits below the registration threshold.
Eligibility: Typically, businesses with annual gross sales or receipts below the VAT threshold—set at PHP 3 million as of 2025—are classified as non-VAT. Tax Obligation: These entities remit a 3% percentage tax to the Bureau of Internal Revenue (BIR) rather than the 12% VAT, streamlining their compliance process.
Most businesses file VAT returns quarterly. Payments are due one calendar month and seven days after the end of your VAT accounting period. For example, if your VAT quarter ends on March 31, your payment deadline would be May 7.
As per the KVAT Act 2003, a dealer is liable for a VAT audit when his turnover exceeds Rupees 1 Crore in a financial year.
Most goods and services are charged at the standard rate of 20%. You should charge this rate unless the goods or services are classed as reduced or zero-rated.
Common mistakes—such as failing to register in the correct countries, applying the wrong VAT rates, or missing important filing deadlines—can lead to serious financial and legal consequences.
What happens if you go over the VAT threshold? If your business has exceeded the VAT threshold in the last 12 months, or you expect it to in the next 30 days, then you are legally required to register for VAT. Even if you go over the threshold temporarily, you are still expected to register.
If your business's taxable turnover exceeds the current VAT threshold (£90,000 for the tax year 2024/25), you are legally required to register for VAT with HMRC.
You must start charging VAT at the appropriate rate on taxable sales once you are a VAT registered trader. This can be as a consequence of either compulsory or voluntary registration.
A taxpayer is mandatorily subject to tax audit if their business's total sales, turnover, or gross receipts exceed Rs. 1 crore in the financial year. For professionals, this threshold is Rs 50 lakh, unless 95% of receipts are in digital mode, where the threshold is Rs.
Tips To Reduce Risk Of GST/HST Audit
You need to register for VAT if you go over the registration threshold (or expect to). There are also thresholds for using some VAT accounting schemes. Use your taxable turnover to work out if you're over a threshold. This is the total value of everything you sell or supply that is not exempt.
VAT (Value Added Tax) is a tax added to most products and services sold by VAT -registered businesses. Businesses have to register for VAT if their VAT taxable turnover is more than £90,000. They can also choose to register if their turnover is less than £90,000. This guide is also available in Welsh (Cymraeg).
The United States does not currently charge a VAT tax on imports, but you will likely have to pay this tax if you import goods into the European Union. In such cases, you may be required to have a VAT ID (also called a VAT registration number).
Products that shouldn't be taxed are considered to be exempt from VAT. Businesses, charities, and other types of organisations can also be considered to be exempt from VAT. A business is VAT-exempt if they only sell VAT-exempt products, or if they're not involved with taxable 'business activities'.
What is Non-VAT Registration? To qualify for Non-VAT registration, your annual sales must be less than P3,000,000 and you registered with the BIR as Non-VAT. If you are a non-vat registered freelancer, this article is for you. Otherwise, if your annual sales is P3,000,000 and above you must register as VAT.
When not to charge VAT