Do I need to register for VAT?

When you sell digital services, such as downloads, online courses, apps or subscriptions, to consumers in the EU, the VAT is due in the country where each customer lives, at that country’s rate. UK businesses have no minimum: it applies from the first sale. You pay it either by registering for the EU’s One Stop Shop in one EU country, which covers them all, or by registering in each country where you have customers. Selling through a platform such as an app store often moves this onto the platform, so check how yours works.

Most services you sell to a business based outside the UK are outside the scope of UK VAT, so you do not charge UK VAT and they do not count towards the £90,000 threshold. Keep evidence that the customer is a business, such as its VAT number. Some services follow different rules, for example those connected with land or events in a particular place. Income paid by an overseas company, such as platform or advertising income, often falls here, so check which company actually pays you.

Goods sent from Great Britain to customers abroad, including the EU, are exports and can be zero-rated, but only if you meet the conditions and hold proof of export, usually within 3 months. Without that proof, you must charge UK VAT. Your customer may also face VAT and duty in their own country.

Under the Windsor Framework, goods in Northern Ireland follow EU VAT rules. Trading goods between Northern Ireland and the EU needs a VAT number starting with XI. Northern Ireland businesses selling goods to EU consumers above £8,818 a year pay VAT in the customer’s country, often through the One Stop Shop Union scheme.

When a UK business buys most services from a supplier outside the UK, it accounts for the VAT itself, known as the reverse charge. If you are not registered yet, the value of those services counts towards the £90,000 threshold, so a business with large overseas costs can have to register sooner than it expects.

VAT-registered businesses can use postponed VAT accounting, which lets you account for import VAT on your VAT return instead of paying it at the border. For goods worth £135 or less sold straight to UK customers, VAT is charged when they are sold, not at import, and if you sell through an online marketplace the marketplace usually charges it.

A margin scheme lets you pay VAT only on your profit on each item, at one-sixth of the difference between what you paid and what you sold it for. It cannot be used for items you were charged VAT on when you bought them, or for precious metals and stones. Get the records wrong and VAT is due on the full selling price.

If you buy in travel services such as hotels or transport and resell them to travellers in your own name, you usually must use the Tour Operators’ Margin Scheme, and you cannot use the Flat Rate Scheme. Since 2 January 2026, taxi and private hire journeys are no longer part of the scheme, unless they are sold as part of a package with accommodation or other transport.

If you cannot issue an invoice for every sale, a retail scheme works out your VAT from your takings instead. The simpler versions are for retail turnover up to £1 million, the others up to £130 million. Retail schemes cannot be used with the Flat Rate Scheme.

If some of your sales are exempt, you may not be able to reclaim all the VAT on your costs, known as partial exemption. You can still reclaim it all if the VAT linked to exempt sales is no more than £625 a month on average and no more than half of all the VAT you pay. A business whose sales are all exempt cannot register at all.

Between VAT-registered businesses in the Construction Industry Scheme, standard and reduced-rated building services usually fall under the domestic reverse charge, so the customer pays the VAT to HMRC, not the supplier. It does not apply when the customer is the end user. Similar rules cover mobile phones and computer chips sold between businesses for £5,000 or more.

Selling or renting commercial property is usually exempt, but you can choose to opt to tax it, which lets you reclaim VAT on costs but means charging VAT on rent or the sale. Notify HMRC, usually within 30 days. An option is permanent unless revoked, normally cannot be revoked for 20 years, and never applies to homes. Opted land you sell also counts towards the £90,000 threshold.

VAT registration belongs to the person or company, not to each business. Someone trading in their own name adds up the sales of everything they run. Each company is registered on its own, but HMRC can treat a business split up just to stay under £90,000 as one, and register them together.

If you register late, HMRC can collect VAT on your sales back to the date you should have been registered, whether or not you charged your customers for it, and may add a penalty. Check your rolling 12-month total at the end of every month, not just at your year end.

Once registered, you can usually reclaim VAT on goods you still have that were bought up to 4 years before, and on services bought up to 6 months before, as long as they were for the business you now run. Keep the invoices from the start.

Unless HMRC has exempted it, every VAT-registered business must keep digital records and send returns through compatible software, with digital links between them. Copying figures by hand between programs is not allowed. Late returns build up penalty points and lead to £200 penalties, and late payments now cost more.

Companies under common control can apply to be treated as one VAT group. Sales between them are then usually ignored, but every member is responsible for the whole group’s VAT, and a group cannot use the Flat Rate Scheme.