VAT Registration in the UK
Everything You Need to Know

Are you unsure if you need to register for VAT if you own a business in London, Croydon? You are not alone. From registration to reporting, we at Taxaccolega assist companies of all sizes in comprehending and handling their VAT obligations.
This is a thorough guide to recent updates, rates, schemes, and VAT registration.

UK VAT registration threshold 2025

• You must register if your VAT taxable turnover is over £90,000.
• If your turnover is less than this sum, you are free to voluntarily register.
• Registration applies to goods, services, and some business transactions.

Your Responsibilities as a VAT-Registered Business

Once registered, you must:
• The prices of your goods and services include VAT at the correct rate.
• Maintain track of VAT paid on purchases made for business.
• Calculating VAT on goods imported into the UK
• Typically, every three months, submit VAT returns to HMRC.
• Pay any VAT you owe to HMRC.
If you charged more VAT than you actually paid, you either pay the difference to HMRC or receive a VAT refunds.

VAT in the UK: What Is It Charged On?

VAT is charged on an additional range of businesses, including:
• Products and services
• Hiring or lending goods
• Selling company assets
• Commission payments
• Items sold to staff (e.g. meals)
• Personal use of business goods
• Bartering, part-exchange, and gifts

These are called “taxable supplies”.
Note: Charities may have different rules.

When VAT Is Not Charged

VAT is not charged on:
• Items that are exempt (e.g., some education and healthcare)
• Goods and services that are outside the scope (VAT rules are not affected)

How Much VAT Should UK Businesses Charge?

Depending on the good or service, there are three different VAT rates:
1. Standard rate of 20% for most trade and services
2. Decreased rate (5%): Some energy-efficient products, car seats for kids, etc.
3. The zero rate (0%) consists of:
• Books and newspapers
• Children’s clothes and shoes
• Motorcycle helmets
• Most exports outside the UK or EU

VAT on Exports and EU Transactions

• Exports outside the UK are usually zero-rated.
• Supplies from Northern Ireland to EU VAT-registered businesses may be zero-rated if the EU VAT number is valid.

UK VAT Schemes for Simplifying VAT Accounting

VAT schemes help certain businesses simplify how they calculate and report VAT.

They are optional and don’t affect the VAT rate you charge.

• VAT Flat Rate Scheme

• Perfect for small companies with taxable turnovers under £150,000 (VAT excluded).
• Depending on your industry, pay a set percentage of your turnover.
With a few exceptions, it is not possible to claim VAT on your purchase.

• Annual Accounting Scheme

• Fit for companies with less than £1.35 million in revenue.
• Instead of filing four VAT returns annually, submit just one.
• Throughout the year, make advance payments.

• Cash Accounting Scheme

• Additionally, for companies with annual revenue under £1.35 million.
• Only pay VAT to HMRC when you receive payment from your clients, not when you send them an invoice.
• Beneficial for cash flow management.

• Retail Schemes and VAT Margin

• VAT Margin Scheme: Only the profit margin, not the entire price, is subject to VAT when selling used goods.
• VAT Retail Schemes: These are made to help retailers figure out VAT in bulk as opposed to on a per-transaction basis.

Recent VAT Updates 2025 Businesses Must Know

VAT Registration Threshold Increased
• As of 1 April 2024, the new limit is up to £90,000.
• Impact: No smaller businesses need to register for VAT.
• Previous threshold: £85,000.

VAT on Private School Fees Introduced

• Effective 1 January 2025
• 20% VAT on private school fees
• It is estimated to raise £1.5 billion for the state education system.

Making Tax Digital (MTD) for VAT in UK

• Mandatory for all VAT-registered businesses
•As a matter of fact, our software is required to file VAT returns.

Let Taxaccolega Help You Register for VAT in London, Croydon

Taxaccolega is a trusted tax and accounting firm in Croydon, London, dedicated to helping businesses:
• Sign up for VAT
• Understand their obligations
• Choose the right VAT scheme
•Stay compliant with HMRC

Whether you’re starting a new business or need to improve your VAT process, we’re here to help.

📞 Contact us today and simplify your VAT journey with confidence.