In this guide

What is VAT?

VAT is charged on taxable sales and may be reclaimed on eligible business purchases. A business normally accounts for VAT through VAT Returns.

For the 2026 to 2027 tax year, the standard rate is 20%, the reduced rate is 5% and the zero rate is 0%. Some supplies are exempt rather than zero-rated.

When should a business register for VAT?

Registration is normally required when taxable turnover goes over £90,000 in a rolling 12-month period, or is expected to go over £90,000 in the next 30 days. The deregistration threshold is £88,000. Voluntary registration is also possible.

How do you charge VAT?

Once registered, the business must use the correct VAT treatment for its supplies, issue compliant VAT invoices where required and keep evidence for the treatment used. VAT is not automatically 20% on every transaction.

How do VAT Returns work?

A VAT Return reports the VAT charged on sales and the VAT reclaimed on eligible purchases. For most quarterly returns, the online submission and payment deadline is one calendar month and 7 days after the accounting period ends.

What records should you prepare for a VAT Return?

For each VAT period, gather the records that support the figures in your VAT account:

  • Sales and purchases, including zero-rated, reduced-rated and exempt items.
  • Copies of sales invoices you issued, including cancelled or mistaken invoices, and purchase invoices for VAT you plan to reclaim.
  • Credit and debit notes, refunds, and bank, cash or till records that help explain the transactions.
  • Records of adjustments and any extra documents your business needs for its VAT scheme or transactions, such as imports or private use.

Check that the records are complete and flag missing invoices, statements or transactions that need an explanation. Agree with your accountant who will reconcile the records, review adjustments, prepare the return and approve or submit it. Submission should be clear in your agreed service scope.

Unless your business is exempt from Making Tax Digital for VAT, keep the required VAT records digitally in compatible software. Keep VAT records for at least 6 years, or 10 years if you use the OSS scheme or have used the MOSS scheme. Records kept for other taxes may need to be kept longer.

See HMRC guidance on keeping VAT records and VAT record keeping (Notice 700/21).

Business responsibilities

  • Keep accurate VAT records and digital records where Making Tax Digital applies.
  • Use the correct VAT treatment for each supply.
  • Submit VAT Returns on time, even where no VAT is due.
  • Pay VAT due by the deadline.
  • Keep registration details and contact information up to date.

Official sources

Rates and deadlines can change. Use these links to check a rate, deadline or eligibility rule.

Need help with VAT?

We can help with VAT records, reconciliations and VAT Returns within an agreed scope.

Discuss VAT support