VAT Rates and Registration Thresholds

VAT applies to taxable supplies, not exempt ones

Value Added Tax (VAT) applies to taxable supplies, which include standard-rated, reduced-rated and zero-rated goods and services. Some things fall outside those categories altogether — postage stamps, financial services and property transactions are among the categories that are exempt from VAT, and exempt is not the same as zero-rated.

Registration thresholds differ by business type and location

A business established in the UK must register once its taxable turnover goes over £90,000. Businesses not established in the UK — known as non-established taxable persons (NETPs) — face a different rule: they must register from the very first taxable sale they make in the UK, with no threshold applying.

Northern Ireland has its own distance selling threshold, which applies to sales made in a calendar year (1 January to 31 December). It also has a separate threshold for relevant acquisitions — goods brought into Northern Ireland — and since 1 January 2021 relevant acquisitions can only be made into Northern Ireland.

Cancelling a VAT registration and putting things right

Once registered, a business can apply to cancel its VAT registration if its taxable turnover falls below £88,000. A business cannot apply for retrospective cancellation of registration because its turnover has fallen.

NETPs cannot deregister simply because their turnover falls; they can only cancel their registration if they have completely stopped making taxable supplies in the UK.

If a business is unhappy with HM Revenue & Customs (HMRC)'s service in handling a registration or deregistration matter, it can contact the person or office it has been dealing with, and if still unhappy, use HMRC's complaints process.