When & How to Register for UK VAT as a Foreign Business

VAT (Value Added Tax) is the UK's consumption tax at 20% standard rate. Understanding when you must register — and when it's beneficial to register voluntarily — can save or cost you thousands.

The VAT Registration Threshold

As of 2024/25, the compulsory VAT registration threshold is £90,000 in taxable turnover within any rolling 12-month period. If you exceed this threshold, you must register within 30 days. Non-compliance results in penalties backdated to when you should have registered.

Voluntary Registration

You can voluntarily register for VAT even below the threshold. This is beneficial if: your customers are primarily VAT-registered businesses (they can reclaim VAT, so your price isn't more expensive), you have significant input VAT to reclaim (e.g., on equipment or subscriptions), or you want to appear more credible/established.

VAT Schemes Available

• Standard Rate Scheme: Charge 20% VAT, reclaim VAT on costs. Most common.
• Flat Rate Scheme: Pay a fixed % of gross turnover (varies by sector). Simpler admin, potentially more profitable for service businesses.
• Cash Accounting Scheme: Only pay VAT when customers pay you (not when invoiced). Better cashflow for B2B businesses.
• Annual Accounting Scheme: One annual return with monthly/quarterly advance payments. Less admin.

The VAT Registration Process

Registration is done online through HMRC's Government Gateway. You'll need your company registration number, bank details, business activity description, and expected turnover. HMRC typically issues your VAT number within 3–6 weeks. You may trade under a VAT number during this period but must account for VAT from the effective date of registration.