This article covers UK VAT rules (HMRC, gov.uk thresholds, MTD). If you are based outside the UK — for example in Turkey (KDV) or a GCC country — your VAT system, rates, and registration thresholds will be different. Check with your local tax authority.
VAT (Value Added Tax) is one of the most misunderstood areas for freelancers and small business owners. The short answer: you must charge VAT on your invoices only if you are VAT-registered with HMRC.
When must you register for VAT?
You must register for VAT if your taxable turnover goes over the VAT registration threshold (£90,000 since 1 April 2024) in any rolling 12-month period, or if you expect it to go over the threshold in the next 30 days alone. If you go over in the past 12 months, you have 30 days from the end of that month to register.
The VAT registration threshold is reviewed periodically by HMRC. Always check the current figure at gov.uk/vat-registration/when-to-register before making a decision.
Can you register voluntarily?
Yes. You can register for VAT even if your turnover is below the threshold. This can be beneficial if:
- Your clients are mainly VAT-registered businesses (they can reclaim the VAT, so it costs them nothing extra)
- You have significant VAT costs on purchases that you want to reclaim
- You want to appear larger or more established to corporate clients
What happens after you register?
Once registered, you must charge VAT on all your taxable invoices, collect it from clients, and pay it to HMRC (minus any VAT you have paid on business purchases). You must also file VAT returns — usually quarterly — through Making Tax Digital (MTD) compatible software.
VAT rates
- Standard rate: 20% — applies to most goods and services
- Reduced rate: 5% — applies to some items like domestic energy and children's car seats
- Zero rate: 0% — applies to things like food, children's clothing, and most printed books
- Exempt: some services (financial services, education, healthcare) are exempt from VAT entirely
Don't charge VAT until you're registered. Showing VAT on an invoice without a VAT registration number is against the law, and HMRC can charge you a penalty. Only add VAT once you have your VAT registration number.
Frequently asked questions
When do I have to register for VAT?
You must register if your taxable turnover goes over the VAT threshold (£90,000 since 1 April 2024) in any rolling 12-month period, or you expect it to in the next 30 days alone. Check the current figure on gov.uk before deciding.
Can I register for VAT voluntarily below the threshold?
Yes — voluntary registration can be beneficial if your clients are mainly VAT-registered businesses that can reclaim the VAT, you have significant VAT costs on purchases you want to reclaim, or you want to appear more established to corporate clients.
What are the standard UK VAT rates?
The standard rate is 20% for most goods and services, the reduced rate is 5% for items like domestic energy, the zero rate is 0% for things like food and children's clothing, and some services such as financial services, education, and healthcare are exempt entirely.
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