Guide · Running your company
When does a new UK company need to register for VAT?
You must register when your taxable turnover passes £90,000 in any rolling 12-month period — or when you expect it to pass £90,000 within the next 30 days alone. Forming a company does not trigger VAT registration; turnover does.
The two tests
- The backward look (rolling 12 months). At the end of each month, total your taxable turnover for the previous 12 months. Over £90,000 → you must register within 30 days.
- The forward look (next 30 days). If at any moment you expect taxable turnover to exceed £90,000 in the next 30 days by itself — a single large contract can do it — you must register straight away.
What counts as taxable turnover
Everything you sell that would be standard, reduced or zero-rated for VAT — which for most service and product businesses means essentially all sales. Exempt income (some financial services, some property) and income genuinely outside the scope of VAT do not count.
Voluntary registration — worth it?
You can register below the threshold. The honest trade-off:
| For | Against |
|---|---|
| Reclaim VAT on setup costs and purchases; look established to corporate customers; no cliff-edge later. | Quarterly Making Tax Digital filings; 20% added to prices that consumer customers cannot reclaim; admin from day one. |
Rule of thumb: mostly B2B with VAT-registered customers → voluntary registration usually helps. Mostly consumers → stay unregistered while you can. (ProSolve itself is not VAT registered — which is why our published prices are the full amount our clients pay.)
Launching a company and want this handled?
Every ProSolve formation includes consultancy time — use it to get your VAT position, banking and registrations mapped before you trade, not after.
See launch packages →Frequently asked questions
Do I have to register for VAT when I form a company?+
No. Incorporation and VAT registration are completely separate. A new company only has to register for VAT once its taxable turnover passes the £90,000 threshold in any rolling 12-month period, or when it expects to pass it within the next 30 days alone. Most brand-new companies start unregistered.
Is the VAT threshold per tax year?+
No — this is the mistake that catches most founders. The £90,000 test is a rolling 12-month window, checked continuously, not a calendar or tax year. At the end of every month you look back over the previous 12 months of taxable turnover.
Should I register voluntarily below the threshold?+
Sometimes. Voluntary registration lets you reclaim VAT on costs and can make you look more established to business customers — but it adds quarterly Making Tax Digital filings and means charging 20% VAT to consumers who cannot reclaim it. B2B businesses with VAT-registered customers usually benefit; consumer-facing businesses usually do not.
What happens if I register late?+
HMRC will backdate your registration to when you should have registered, meaning you owe the VAT you should have charged from that date — whether or not you actually charged it — plus potential late-registration penalties based on how late you are and how much is owed.
How do I actually register?+
Online through your Government Gateway / HMRC business tax account. You will need your company number, UTR, turnover figures and bank details. Most registrations are processed within a few weeks, and you must start keeping digital VAT records under Making Tax Digital from day one of registration.
This guide is general information, not tax advice, and reflects the VAT registration threshold as we understand it in 2026. Thresholds and rules change at Budgets — always check current guidance on GOV.UK or speak to an accountant before acting.