VAT GUIDE 2025/26
VAT Guide for UK Businesses
Understanding VAT is crucial for UK businesses. Learn about registration thresholds, rates, schemes, and Making Tax Digital requirements.
VAT Registration Threshold
£90,000
You must register for VAT if your taxable turnover exceeds £90,000 in any 12-month period. You can also register voluntarily below this threshold.
VAT Rates in the UK
20%
Standard Rate
Most goods and services
5%
Reduced Rate
Home energy, child car seats, sanitary products
0%
Zero Rate
Food, books, children's clothing, public transport
Exempt
VAT Exempt
Insurance, education, health services, postal services
VAT Schemes for Small Businesses
Flat Rate Scheme
Eligibility: Turnover under £150,000
Pay a fixed percentage of turnover, keep the difference
Learn more →Cash Accounting Scheme
Eligibility: Turnover under £1.35m
Only pay VAT when you receive payment from customers
Learn more →Annual Accounting Scheme
Eligibility: Turnover under £1.35m
Submit one VAT return per year instead of quarterly
Learn more →MTD FOR VAT
Making Tax Digital Requirements
All VAT-registered businesses must now comply with Making Tax Digital (MTD) requirements. This means keeping digital records and submitting VAT returns using compatible software.
- Keep digital records of all VAT transactions
- Use MTD-compatible software (like Xero, QuickBooks, FreeAgent)
- Submit VAT returns digitally through the software
- Maintain a digital link between records and returns
VAT Returns Made Simple
TaxAce handles all your VAT compliance including MTD submissions, quarterly returns, and scheme selection advice.
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