VAT registration basics for new businesses

The basics for new businesses

You must register for VAT once your taxable turnover exceeds £90,000 in any rolling 12-month period (April 2024 onwards). For new businesses, this can sneak up — track your monthly turnover from day one.

You can also register voluntarily before reaching the threshold. Whether that's worthwhile depends on your customers and your purchases.

Voluntary registration: when it makes sense

• Your customers are mostly VAT-registered businesses (they reclaim the VAT, so it's neutral for them)
• You have significant input VAT to reclaim (equipment, stock, premises costs)
• You want to look established to larger commercial customers

When voluntary registration backfires

• Your customers are consumers — your prices effectively rise by 20%
• Most of your supplies are VAT-exempt
• You're not ready for the admin (digital records, MTD-compatible software, quarterly returns)

Plan ahead

• Track your rolling 12-month turnover from your first sale
• Set up MTD-compatible bookkeeping software early — switching mid-stride is painful
• If you'll register voluntarily, run the numbers (input VAT recovered vs. customer price impact)
• Allow 30 days for HMRC to issue your VAT number after registering