Key facts
- You can register for VAT even if your turnover is below £90,000.
- Main benefit: you can reclaim VAT on business purchases.
- Main drawback: you must charge VAT to customers and file returns.
- Particularly useful if you sell mainly to other VAT-registered businesses.
Why Register Voluntarily?
Even if your taxable turnover is below £90,000, there are good reasons to consider registering:[2]
- Reclaim input VAT — recover VAT on business purchases, saving you money
- Credibility — some customers and suppliers prefer dealing with VAT-registered businesses
- B2B sales — VAT-registered customers can reclaim the VAT you charge, so it costs them nothing extra
- Pre-registration VAT — reclaim VAT on goods (4 years) and services (6 months) purchased before registration
Potential Drawbacks
- Price increase for consumers — if you sell to the general public, adding 20% VAT makes you more expensive (unless you absorb it)
- Admin burden — you must file quarterly VAT Returns and keep digital records under MTD
- Cash flow — you collect VAT but must pay it to HMRC, which can affect cash flow
- Penalties — late filing or payment attracts penalty points and interest
When Does It Make Sense?
| Scenario | Voluntary Registration? |
|---|---|
| You sell mainly to VAT-registered businesses | Usually beneficial — they reclaim the VAT |
| You sell mainly to the general public | Less beneficial — they can’t reclaim VAT |
| You make zero-rated sales (e.g. exports, food) | Very beneficial — you reclaim input VAT with no output VAT |
| You have high input VAT (equipment, stock) | Beneficial — you reclaim more than you pay |
| You’re approaching the threshold | Register early to avoid rushed registration |
Tip: If you mainly make zero-rated supplies (like a food exporter), voluntary registration means HMRC regularly refunds you — you reclaim input VAT but charge 0% on sales.
How to Register Voluntarily
The process is the same as compulsory registration:[1]
- Apply online through Government Gateway
- Select your preferred registration date
- Choose any VAT schemes you want to join
You can choose your own registration date (subject to HMRC approval).
Can You Deregister Later?
Yes. If your taxable turnover drops below the deregistration threshold (£88,000), you can apply to deregister. See our VAT Deregistration guide.
Frequently Asked Questions
Can I register for VAT if my turnover is below the threshold?
Yes. You can register for VAT voluntarily even if your taxable turnover is below £90,000. This lets you reclaim VAT on business purchases, though you must also charge VAT to your customers.
Is voluntary VAT registration worth it?
It is usually beneficial if you sell mainly to VAT-registered businesses (who can reclaim the VAT) or make zero-rated supplies (so you get regular refunds). It is less beneficial if you sell mainly to the general public, as adding 20% VAT increases your prices.
What are the disadvantages of voluntary VAT registration?
The main drawbacks are the admin burden of filing quarterly VAT Returns, the need to keep digital records under MTD, and the fact that adding VAT makes your prices higher for non-VAT-registered customers.
Can I deregister from VAT after registering voluntarily?
Yes. If your taxable turnover drops below the deregistration threshold of £88,000, you can apply to cancel your VAT registration.
Further Reading
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Sources
- Register for VAT — GOV.UK
- Voluntary VAT registration — GOV.UK
- VAT guide (VAT Notice 700) — GOV.UK