Do I need to register for VAT?
How the UK VAT threshold works, when registration becomes mandatory, when it's worth doing voluntarily, and what changes in Keepr once you're registered.
There's one number worth knowing if you're self-employed in the UK: £90,000. That's the VAT registration threshold from 1 April 2024. Cross it on a rolling 12-month basis and you must register; stay under it and you don't have to, but you can choose to.
The £90,000 threshold, explained
The threshold is £90,000 of VAT-taxable turnover in any rolling 12-month period. Two things in that sentence catch people out:
1. "Rolling 12 months" isn't your tax year. It's a moving window. At the end of every month, you check the previous 12 months as a single total - so you can trip the threshold in August even though no tax year ever showed £90,000.
2. "Taxable turnover" isn't total income. It's all your sales that aren't VAT-exempt or outside the scope of UK VAT - standard-rated (20%), reduced-rated (5%), and zero-rated (0%). It excludes truly exempt income (most insurance, finance, education, certain healthcare) and one-off sales of business assets. The figure is net, before VAT.
When registration becomes mandatory
Two separate tests trigger mandatory registration. If either is true, you must register.
Test 1: the backward look
At the end of any month, if your taxable turnover for the previous 12 months has gone over £90,000, you must register within 30 days of the end of that month. Your effective registration date is the first day of the second month after you crossed.
Test 2: the forward look
If at any point you reasonably expect your taxable turnover to exceed £90,000 in the next 30 days alone, you must register by the end of that 30-day period; effective date is the start of it. This catches one-off big contracts that would otherwise wait for the rolling-12 maths.
Full reference: When you must register on GOV.UK.
What if I'm below the threshold?
You don't have to register. But you can choose to voluntarily - and for some businesses it makes financial sense.
Reasons to register voluntarily
You reclaim VAT on business purchases. The VAT you pay on equipment, software, stock and professional services becomes recoverable. If you spend a lot on VAT-able costs, this can outweigh the admin.
Your customers are themselves VAT-registered. If you sell mainly to other VAT-registered businesses, they reclaim any VAT you charge anyway - so adding 20% to your invoices costs them nothing while you reclaim VAT on your own costs.
You make zero-rated sales. Children's clothing, most food and books are zero-rated: you charge 0% on sales but still reclaim VAT on costs - a net refund position from HMRC.
Reasons not to
You sell mainly to consumers. Adding 20% to your prices makes you more expensive - or eats 20% of your margin if you absorb it. Most consumer-facing freelancers stay unregistered until they have to.
Admin and cash flow. Quarterly returns, digital record-keeping under Making Tax Digital, and holding VAT you've collected until the quarterly payment date can become a cash-flow trap.
Once you're registered: choose a scheme
When you register, HMRC asks which VAT accounting scheme you want. There's no universal "best" - it depends on how you invoice, what you spend on, and how big you are.
| Scheme | How it works | Best for |
|---|---|---|
| Standard accounting | Record VAT on the date of each invoice. Default if you don't pick another. | Most businesses. |
| Cash accounting | Record VAT only when money actually moves. Available up to £1.35m turnover. | Businesses with slow-paying customers. |
| Flat Rate Scheme | Pay HMRC a fixed % of gross sales (typically 6.5%-14.5% by industry) instead of tracking input VAT. Up to £150,000 turnover. | Small service businesses with low input VAT. |
| Annual accounting | One annual return with interim payments. | Businesses that prefer one reconciliation to four. |
Worth reading the VAT Flat Rate Scheme on GOV.UK before deciding - an accountant's advice is worth the small cost here.
Setting Keepr up once you're VAT-registered
Whichever scheme you picked, the day-to-day in Keepr is the same: add the VAT rate once, and it appears in the Tax dropdown on every invoice line and expense form afterwards.
- Open Settings from the menu under your name and click the Taxes tab.
- Add a row with the Name VAT and the Rate 20. If you also sell reduced-rated items, add a Reduced VAT row at rate 5. Zero-rated sales don't need a row - leave the line's Tax dropdown on No Tax.
- Click Save Taxes. Every new invoice line and expense now has VAT one click away.
For the full walk-through, see Setting up tax preferences in Keepr.
Quick decision checklist
| Your situation | What to do |
|---|---|
| Rolling 12-month sales already over £90,000 | Register now - 30 days from the end of the month you crossed in. |
| One-off contract pushes you over £90,000 in the next 30 days | Register by the end of that 30-day period; effective from day one. |
| Below threshold, sell mainly to consumers | Probably don't register voluntarily - it just makes you more expensive. |
| Below threshold, B2B clients, heavy VAT-able costs | Worth considering - clients don't care, you reclaim input VAT. |
| Below threshold, zero-rated business (e.g. books, kids' clothes) | Voluntary registration usually pays - reclaim VAT, charge none. |
| Below threshold, low costs, mixed customer base | Easier to stay unregistered until you have to. |
Where to read the rules in full
HMRC's guidance is authoritative: VAT registration on GOV.UK, When you must register on GOV.UK, and VAT registration thresholds on GOV.UK. For unusual situations - international sales, mixed exempt and taxable supplies, group registration - speak to an accountant before deciding.