Understanding VAT for UK Businesses

1. VAT Registration Thresholds

• 📈 Mandatory Registration: You must register for VAT if your taxable turnover exceeds £90,000 in any 12-month rolling period.
• 🛑 Deregistration: You may deregister if your turnover falls below £88,000.
• 💡 Voluntary Registration: You can choose to register early even if you’re under the threshold — useful for reclaiming VAT on business expenses or appearing more established to clients.

2. VAT Schemes Explained

Once registered, businesses can choose from different VAT accounting schemes to match their size and admin preferences.

• 💼 Standard VAT Scheme: Charge VAT on your sales, reclaim VAT on your purchases, and report the difference quarterly via a VAT return.
• 📉 Flat Rate Scheme (FRS): Designed for small businesses with turnover under £150,000 (excluding VAT). You pay HMRC a fixed percentage of your gross turnover and keep the difference — but you can't reclaim VAT on most expenses.

Note: In your first year under the Flat Rate Scheme, you get a 1% discount on the industry rate.

3. Flat Rate Scheme Industry Rates (Sample)

Below are example percentages you pay on your total VAT-inclusive turnover under the Flat Rate Scheme:

• 📊 Accountancy & Bookkeeping: 14.5%
• 💻 Computer & IT Consultancy: 14.5%
• 🎨 Advertising & Marketing: 11%
• 📸 Photography: 11%
• 📦 Retail (non-food): 7.5%
• 🛠️ Trades (e.g., builders, electricians): 14.5%
• 🚚 Transport or Couriers: 10%
• 📚 Education & Training: 12%

(Rates are set by HMRC and subject to change. We help ensure you choose the right category.)

4. Need Help Registering?

We can handle your VAT registration, scheme selection, and ongoing returns. Whether you're just crossing the threshold or choosing a flat rate category, we’ll make sure it’s compliant and cost-effective.

Get in touch for a free VAT consultation and we’ll help you make the right move.