How to register for VAT and other relevant taxes

You must register your business for Value Added Tax (VAT) with HM Revenue & Customs (HMRC) if your VAT-taxable turnover for any rolling 12-month period exceeds £90,000. Separately, if you plan to hire any staff, you must register as an employer for PAYE (Pay As You Earn) before their first payday. Getting these registrations done correctly and on time is a key legal requirement.

Registering for VAT

What is VAT?

Value Added Tax (VAT) is a tax applied to most goods and services sold by VAT-registered businesses. If you are registered, you must charge VAT to your customers on top of your prices. The good news is that you can also reclaim the VAT you pay on most goods and services you buy for your business.

When do I need to register for VAT?

Registration is compulsory if your total VAT-taxable turnover for the last 12 months has gone over the £90,000 threshold (correct as of April 2024). It’s important to note this is a ‘rolling’ 12-month period, not a fixed financial year. You also need to register if you expect your turnover to exceed the threshold in the next 30 days alone.

You can also choose to register for VAT voluntarily, even if your turnover is below the threshold. This can be beneficial if you sell to other VAT-registered businesses or if you buy a lot of goods and services for your business that have VAT applied, as you can reclaim it.

How to register for VAT

The easiest way to register is online through the GOV.UK website.

1. Get your information ready: You will need your business details, including your Unique Taxpayer Reference (UTR), business activity, turnover, and bank account details.
2. Create a Government Gateway account: If you don't already have one for your business, you'll need to create one.
3. Complete the online form: Follow the step-by-step process on the HMRC portal. You’ll need to state whether the registration is compulsory or voluntary.

After you submit your application, it can take around 30 working days to receive your VAT registration certificate, which confirms your VAT number and your first VAT return period.

Top Tip: Once registered, you must submit VAT returns, usually every three months, through the government's Making Tax Digital (MTD) system. Using accounting software like Xero, QuickBooks, or FreeAgent can make this process much simpler.

Registering for PAYE (as an employer)

What is PAYE?

PAYE, or 'Pay As You Earn', is the system HMRC uses to collect Income Tax and National Insurance from employees' pay. As an employer, you are responsible for calculating and deducting these amounts from your staff's wages before you pay them, and then paying these deductions to HMRC.

When do I need to register for PAYE?

You must register for PAYE before the first payday of your first employee. Don't leave it until the last minute, as the registration process can take up to 15 working days.

How to register for PAYE

You can register online at the GOV.UK website. The process is straightforward, but you can't register more than 2 months before you start employing someone.

1. Gather your information: You'll need details about your business and your employees.
2. Register online: Use the online service to register as an employer.
3. Receive your reference numbers: HMRC will send you an Accounts Office reference number and a PAYE reference number. You will need these to report your payroll information and make payments.

What happens next? After registering, you will need to run payroll on or before each payday. This involves calculating pay and deductions, reporting this information to HMRC in real-time (known as RTI), and paying the tax and National Insurance you owe. Payroll software is essential for managing this process efficiently.