Are limited companies automatically registered for VAT?
A common source of confusion for new limited company owners is VAT (Value Added Tax). Many are unsure whether their company is automatically registered for VAT when incorporated at Companies House, or if this registration needs to be done separately. In this article, we’ll clarify this point and cover other essential VAT information that every new company owner should be aware of. Let’s get started.
Companies are not automatically registered for VAT
Company registration and VAT registration are entirely separate processes. When you register a UK limited company, whether directly through Companies House or via a company operating system like Startxpress, your company is not automatically registered for VAT with HMRC.
Although HMRC is automatically notified when new companies are registered, this notification is unrelated to VAT registration. The purpose of this notification is to inform HMRC of the new company’s existence so that they can allocate a Unique Taxpayer Reference (UTR). This UTR is essential for any correspondence or submissions the company needs to make to HMRC.
VAT and when you need to register for it
Value Added Tax (VAT) is a tax that VAT-registered companies and businesses add to the cost of their products and services.
The standard VAT rate is currently 20% (you can check here for other VAT rates).
Starting from 1 April 2024, any business with a taxable turnover exceeding £90,000 in the past 12 months, or expected to exceed this threshold in the next 30 days, must register for VAT. This 12-month period isn’t fixed like the tax year; it can cover any rolling 12-month period, such as from the beginning of September to the end of August.
If a business does not exceed the £90,000 VAT threshold, it is not required to register for VAT. However, many businesses choose to register voluntarily due to the benefits VAT registration can offer.
Once a business has been registered for VAT, it must submit a VAT return and pay the VAT owed to HMRC on a quarterly basis (though this can be adjusted to a monthly schedule if preferred).
The Benefits of VAT Registration
If you register your company for VAT, whether because you have exceeded the £90,000 VAT threshold, anticipate exceeding it soon, or choose to do so voluntarily, you can:
- Reclaim VAT on goods or services that your company has bought from other businesses
- Give the impression of being a large, successful and well-established business – something that is appealing to potential customers and other businesses that you are looking to work with
- Impress possible investors, as an increase in your pricing will result in more cash flow
- Improve your bookkeeping, because being VAT registered will require you to be diligent with your financial records
What happens if you don’t register for VAT
Companies are not automatically registered for VAT when they surpass the VAT threshold.
If your company exceeds the threshold, you must register for VAT within 30 days following the end of the month in which you surpassed it. For instance, if you go over the threshold at any point in October, you need to register by the end of November.
If your company is going to go over the threshold in the next 30 days, you should register before the 30-day period ends.
Failure to register for VAT after your taxable turnover exceeds £90,000 will result in a penalty. The penalty amount varies depending on how late the registration is, with a minimum charge of £50.
| How late? | Penalty |
| 9 months or less | 5% of the total owed + the amount you should have paid |
| 9 months to 18 months | 10% of the total owed + the amount you should have paid |
| Over 18 months | 15% of the total owed + the amount you should have paid |
How to register for VAT
You can register for VAT online directly with HMRC. To do this, you will need your:
- Government Gateway ID and password
- Company name
- Nature of business information
- Turnover information
- Bank details
- Company registration number
- UTR number
- Corporation Tax information
- Pay As You Earn information (if applicable)
- Self Assessment information (if applicable)
The VAT registration process can be overwhelming for some business owners. If you’re worried about making a mistake, why not let one of our VAT experts handle the registration for you? If your company is already set up, you can purchase our VAT Registration Service, or if you haven’t formed your company yet, this service is included in our company formation packages. The service includes:
- Professional preparation of your VAT registration
- Access to a VAT expert who can answer any questions you might have
- Comprehensive assistance with setting up your Government Gateway account
- Your unique VAT registration number and Certificate of VAT Registration
To learn more about this service, click the link above, or if you have any questions, feel free to reach out to us via support@startxpress.io and we’ll get back to you as soon as possible.
Do you have any other questions?
We’ve clarified that limited companies in the UK are not automatically registered for VAT. Company registration and VAT registration are separate processes. Businesses need to register for VAT once their taxable turnover exceeds the £90,000 threshold over any 12-month period, or they can register voluntarily for certain benefits.
For more details on VAT registration, visit the Startxpress Help Center and Blog. If you need further assistance, reach out to us at support@startxpress.io!
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