VAT Guide for Small Businesses 2026 | Makesworth

Makesworth resource guide

VAT Guide for Small Businesses

Applies to: UK VAT rules reviewed September 2026

VAT applies to taxable supplies rather than profit. A business can therefore have a registration obligation even when margins are low or cash is tight.

When registration is compulsory

You must generally register if taxable turnover for the previous rolling 12 months exceeds £90,000, or if you expect it to exceed £90,000 in the next 30 days alone. Monitor the rolling total every month. Taxable turnover includes standard, reduced and zero-rated supplies, but not exempt or outside-the-scope supplies.

Registration timing

Under the historic test, an application is normally due within 30 days after the end of the month in which the threshold is exceeded. The forward-looking test can create an earlier effective date. Late registration may require VAT to be paid from the date registration should have taken effect, even if it was not charged separately.

Rates, records and returns

The principal rates are 20%, 5% and 0%. Zero-rated supplies are not the same as exempt supplies. VAT-registered businesses must keep suitable records and issue valid invoices where required. Returns are usually quarterly and the normal online filing and payment deadline is one calendar month and seven days after the period ends.

Schemes and deregistration

Cash Accounting, Annual Accounting and the Flat Rate Scheme may help eligible businesses but should be compared with standard accounting. A business can generally apply to deregister where expected taxable turnover falls below £88,000. A final return and VAT on certain assets may be required.

When advice matters

Seek advice for land and property, business transfers, partial exemption, international supplies, large corrections or disputed classifications.

Happy with our services? Please leave us a Google Review. Click here

makesworth accountants logo
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.