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The simple answer to this is no; you don’t need to be a limited company to be able to register for VAT. The more comprehensive response is that HMRC doesn’t differentiate between limited companies and sole traders when it comes to VAT registration.

Instead, HMRC uses a rolling turnover threshold as the marker for when any business needs to start paying VAT. Rolling turnover just means that it takes into account the turnover within a rolling 12-month period, rather than a fixed time period such as a financial or calendar year.

What is VAT, anyway?

Starting up a business brings with it a whole whirlwind of things to think about, lingo that makes no sense and payments you didn’t realise you’d need to fork out for (as well as ways of relieving some of these costs). Value Added Tax (VAT) is one of those headache-inducing realities that most businesses will have to deal with at some point in their entrepreneurial career.

VAT is added to the cost of most goods and services in the UK, though there are some exemptions. It’s not an exhaustive list, but includes:

Our video guide to VAT explains things in a bit more detail below.



Find full details of full and partial VAT exemption on the HMRC website.

What is the VAT registration threshold?

The current threshold for VAT registration sits at £85,000. So, if a business starts making a VAT-taxable turnover of £85,000 or more within any 12-month period, then they will need to register to pay VAT. It’s worth noting that HMRC defines VAT-taxable turnover as: “The total value of everything you sell that is not exempt from VAT.”

If you think that your taxable turnover could reach the threshold within a rolling 30-day period, then you must register for VAT immediately.

comprehensive vat returns service

What if my business is below the VAT registration threshold?

If your rolling turnover is less than £85,000 then you aren’t required to register for VAT. However, there are some businesses which opt for voluntary VAT registration for a number of reasons including:

Read our article about making a voluntary registration for VAT to find out if it’s suitable for you.

Unless you’re well below the threshold, check your VAT-taxable turnover regularly to ensure that you don’t pass the £85,000 mark without realising!

If you think you need to register your business for VAT but aren’t sure about exemptions or which scheme is best for you, get in touch with our online accountants and bookkeepers. We’ll help simplify the VAT process, and make sure you’re dealing with VAT in the most efficient and economical way for your business. Call us on 020 3355 4047 or use the Live Chat button on screen.

About The Author

Stephanie Whalley

Serial snacker, compulsive cocktail sipper and full time wordsmith with a penchant for alliteration, all things marketing and pineapple on pizza.

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