U.K. Professional Clients
U.K. Private Customers
Legal requirements to register a limited company for the VAT: although it is possible to voluntarily register for VAT in the UK at any time, there are certain legal requirements around VAT registration that apply at a certain point in your business.
When you should register for VAT: a limited company is legally required to register for VAT when the total value of its taxable supplies, distance sales, and relevant acquisitions exceeds the current registration threshold. As of 2021, this threshold is a £85,000 turnover. If you are not resident in the UK, but your private company is registered in the UK, you will be liable for VAT registration even if your company's turnover is below the current registration threshold.
Additionally, the requirement for VAT registration is based on your business's trade, rather than the country in which your business resides, so if you are registered elsewhere, but you trade directly with the UK, or supply goods over an internet-based distribution network, such as an online shop, you will also be liable to pay VAT.
You may also find that you have to register for VAT if you take over a limited company that is already VAT-registered.
Some legal definitions: taxable supplies refers to supplies made in the UK that are not exempt from VAT. Taxable supplies include those that are under the zero rate category, as well as the reduced and standard rates. The words 'supply' and 'supplies' here are defined as the sale of goods or services.
Zero-rated supplies include things like food bought in shops and supermarkets (not food bought in restaurants), public transport services, and books and newspapers.
Reduced-rated supplies carry with them a 5% VAT rate, and these can include domestic fuel and power supplies, women's sanitary products, and residential alterations, conversions, and renovations.
The standard rate of VAT is currently 20%.