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Do you need to register for VAT in the United Kingdom?
A UK VAT registration is mandatory when your taxable activity falls within HMRC rules, even if your company is not established in the UK. A UK-established business must register when taxable turnover exceeds GBP 90,000 over a rolling 12-month period, or when it expects to exceed GBP 90,000 in the next 30 days. A non-established taxable person has no UK registration threshold when it makes taxable supplies in the UK. For a quick reference to UK VAT rates and thresholds, see the UK VAT guide.
For the registration route, use the guide on how to get a UK VAT number. If you are not established in the UK, a VAT agent or the tax representative in the United Kingdom service can secure the process.
UK VAT rates: 20%, 5% and 0%
The UK standard VAT rate is 20%. The reduced rate is 5%, and the zero rate is 0%. These rates are not interchangeable: a zero-rated sale is taxable at 0%, while an exempt sale can restrict input VAT recovery.
| Rate | VAT treatment | Typical use cases |
|---|---|---|
| 20% | Standard rate | Most goods and services |
| 5% | Reduced rate | Certain domestic fuel, energy-saving materials and regulated categories |
| 0% | Zero rate | Certain food, books, children clothing and qualifying exports |
| Exempt | No VAT charged, input VAT often restricted | Some financial, insurance, health, education and property transactions |
VAT returns and Making Tax Digital
Most UK VAT-registered businesses file VAT returns quarterly, and the deadline is one month and 7 days after the end of the accounting period. Making Tax Digital applies to VAT-registered businesses, so you must keep digital VAT records and submit VAT returns using MTD-compatible software.
The full filing workflow is covered in UK VAT return deadlines and MTD.
Late filing and late payment penalties
HMRC uses a points-based system for late VAT returns and a separate penalty system for late payment. A late submission adds a penalty point. When the business reaches the points threshold for its filing frequency, HMRC charges a GBP 200 penalty. Further late submissions can trigger additional GBP 200 penalties while the business remains above the threshold.
Import VAT and postponed VAT accounting
Postponed VAT accounting allows a UK VAT-registered importer to account for import VAT on the VAT return instead of paying it upfront at customs. This is a cash-flow advantage, not a VAT exemption. The import VAT is declared and, where recoverable, reclaimed on the same return. The full list of import documents required in the United Kingdom covers customs declarations, import VAT certificates and EORI requirements.
For the step-by-step cash-flow mechanism, use the guide on importing goods into the UK without paying VAT upfront.
Ecommerce, marketplaces and the GBP 135 rule
Low-value consignments with an intrinsic value not exceeding GBP 135 follow specific UK VAT collection rules. For many B2C sales of goods imported into Great Britain, VAT is collected at the point of sale rather than at import. Online marketplaces can become responsible for charging and accounting for VAT in specific platform sales.
For DDP sales, align invoice wording, Incoterms and importer-of-record responsibility before checkout goes live. The DDP guide for the UK explains the broader import position: selling DDP after Brexit.
Northern Ireland: EU goods rules still matter
Northern Ireland has a specific VAT position for goods because EU-related goods rules still apply in defined situations. Great Britain is England, Scotland and Wales. Northern Ireland is part of the UK, but goods movements involving Northern Ireland and the EU can require a different VAT analysis.
- Goods moving from Great Britain to Northern Ireland.
- Goods moving from Northern Ireland to Great Britain.
- Goods moving between Northern Ireland and the EU.
- Goods imported into Northern Ireland from outside the UK and EU.
UK VAT schemes for smaller businesses
The UK has optional VAT schemes, but they are not a shortcut for every foreign company. The Flat Rate Scheme, Cash Accounting Scheme and Annual Accounting Scheme can simplify VAT for eligible businesses, mainly where the UK activity is smaller and predictable.
| Scheme | Main purpose | Common eligibility point |
|---|---|---|
| Flat Rate Scheme | Pay VAT as a fixed percentage of VAT-inclusive turnover | Expected VAT taxable turnover of GBP 150,000 or less, excluding VAT |
| Cash Accounting Scheme | Account for VAT when paid, not when invoiced | VAT taxable turnover of GBP 1.35 million or less |
| Annual Accounting Scheme | Submit one VAT return per year with payments on account | Estimated VAT taxable turnover of GBP 1.35 million or less |
VAT invoices and record keeping
A UK VAT invoice must support the VAT treatment applied on the transaction. If the invoice charges 20%, the record must justify a UK taxable supply. If it applies 0%, reverse charge, exemption or no UK VAT, the record must explain why. The mandatory fields for a valid UK tax invoice are covered in the guide to invoicing in the United Kingdom.
VAT refunds and input VAT recovery
VAT recovery depends on registration status, the type of expense and the link with taxable business activity. A UK VAT-registered business normally recovers input VAT through its VAT return, provided the VAT is correctly charged and the purchase supports taxable activity. Non-established businesses that cannot recover VAT through a UK return may use the UK VAT refund procedure under the VAT65A form.
Common UK VAT mistakes
- Waiting for GBP 90,000 of UK turnover although the company is not established in the UK and has no threshold.
- Treating zero-rated and exempt supplies as the same VAT category.
- Filing VAT returns outside MTD-compatible software.
- Forgetting to download and reconcile monthly PIVA statements.
- Charging UK VAT on a marketplace sale where the marketplace is responsible.
- Ignoring the GBP 135 ecommerce rule.
- Treating Northern Ireland exactly like Great Britain for EU goods movements.
FAQ
What is the standard VAT rate in the United Kingdom?
The standard VAT rate in the United Kingdom is 20%. The reduced rate is 5%, and the zero rate is 0%. The correct treatment depends on the product or service, not on the customer alone.
When must a foreign company register for UK VAT?
A foreign company must usually register from the first taxable UK supply when it is not established in the UK. The GBP 90,000 threshold applies to UK-established businesses. Check the UK VAT registration route before making the first taxable sale.
What is the UK VAT return deadline?
Most VAT returns are due one month and 7 days after the end of the VAT period. Payment is generally due on the same date. See UK VAT return deadlines and MTD.
Can import VAT be postponed in the UK?
Yes. VAT-registered importers can usually use postponed VAT accounting to declare import VAT on the VAT return instead of paying it upfront at customs. This is a cash-flow mechanism, not an exemption.
Does Northern Ireland follow the same VAT rules as Great Britain?
Not always. Services generally follow UK VAT rules, but goods involving Northern Ireland and the EU can require a specific analysis. Great Britain and Northern Ireland should not be merged in your VAT matrix.
Who accounts for VAT on marketplace sales under GBP 135?
For many low-value imported B2C sales not exceeding GBP 135, the online marketplace can be treated as responsible for VAT. Direct seller sales and B2B sales can follow different rules.
Countries concerned
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