Voluntary VAT Registration: Should You Register Before the Threshold?

You must register for VAT when your taxable turnover goes over the threshold, which is £90,000. But you can choose to register earlier if your turnover is below it. Whether that is a good idea depends mainly on who your customers are.

If your taxable turnover is below £90,000, you can still apply to register for VAT voluntarily. Once registered, you must charge VAT on your taxable sales and follow the same rules as any other VAT-registered business, including filing returns under Making Tax Digital. See the [HMRC guidance on registering for VAT](https://www.gov.uk/register-for-vat) for the current rules.

- **You can reclaim VAT on costs.** If you buy equipment, stock or services with VAT on them, registering lets you reclaim that VAT, subject to the normal rules. - **Your customers are VAT-registered.** If they can reclaim the VAT you charge, registering costs them nothing and can make you look more established. - **You expect to pass the threshold soon.** Registering on your own timetable avoids a rushed registration and the risk of registering late. - **Start-up spending is heavy.** Businesses with large set-up costs and little early income can recover meaningful VAT.

- **Your customers are consumers or cannot reclaim VAT.** If you add VAT, your prices go up for them, or your margin falls if you absorb it. - **Extra admin.** You will keep VAT records, issue compliant invoices and submit returns, usually quarterly. - **Some of your sales may be exempt.** If a large share of your income is exempt, you may not be able to reclaim all your input VAT.

1. Work out what share of your sales is standard-rated, reduced-rate, zero-rated or exempt. 2. Estimate the VAT you would reclaim on costs against the VAT you would charge. 3. Decide whether the flat rate scheme or standard accounting suits you better. Our [VAT registration guide](/vat-registration) explains the options. 4. Check your accounting software is set up for VAT and Making Tax Digital. 5. Plan the effect on pricing and cash flow, since VAT collected is owed to HMRC.

Our [VAT service](/vat) covers registration, scheme choice and returns, and our [bookkeeping service](/bookkeeping) keeps VAT-ready records from the start. [Request a call](/contact) if you would like to talk it through.