1. VAT Registration Threshold

• You must register for VAT if your taxable turnover exceeds £90,000 (as of April 2024).

• If your turnover is below this threshold, you can register voluntarily.

2. VAT Schemes Available

• Standard VAT Scheme – Charge VAT on sales, reclaim VAT on purchases, and submit VAT returns (usually quarterly).

• Flat Rate Scheme – Pay a fixed percentage of turnover as VAT (simplifies accounting but may not allow reclaiming VAT on purchases).

• Cash Accounting Scheme – Pay VAT only when you receive payment from customers (helps with cash flow).

• Annual Accounting Scheme – Make advance VAT payments and submit one VAT return per year.

3. VAT Rates in 2025

• Standard Rate: 20% (most goods and services).

• Reduced Rate: 5% (e.g., energy-saving home improvements).

• Zero Rate: 0% (e.g., most food, children’s clothing).

• Exempt Items: No VAT (e.g., financial services, education).

4. VAT Filing & Deadlines

• VAT returns are submitted online through Making Tax Digital (MTD) for VAT using compatible software like Xero.

• Filing is usually quarterly, with deadlines one month and seven days after the period ends.

5. VAT and Self-Employment

• Even if self-employed, you must register if turnover exceeds £90,000.

• If you operate multiple businesses, HMRC may aggregate their turnovers.

• VAT applies to both goods and services, including digital sales.

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Voluntary VAT Registration for Self-Employed (UK 2025)

You can register for VAT voluntarily even if your turnover is below £90,000. This can be beneficial in some cases, but may also add administrative work