What’s the VAT Threshold in the UK for 2025?
If you are running a business in the UK, one of the first financial questions you will face is, “At what point do I need to register for VAT?” As we move into 2025, the rules remain consistent, but understanding the detail is essential for staying compliant and planning ahead.
Tax
The current UK VAT registration threshold is £90,000 of VAT taxable turnover in any rolling 12 month period. This applies as soon as your turnover exceeds that figure, not at the end of the tax year and not based on annual accounts. If you expect to surpass £90,000 within the next 30 days, you must also register.
Taxable turnover includes all goods and services that are liable for VAT at the standard, reduced or zero rate. Exempt sales do not count towards the threshold. Once you cross the limit, you must charge VAT on applicable sales, keep appropriate VAT records and submit VAT returns digitally.
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Budgeting
For many small businesses, stepping into VAT registration brings both responsibilities and opportunities. You may need to consider whether to adjust your prices to include VAT, which can influence customer expectations and cash flow. There is also the administrative side, including issuing VAT invoices and maintaining compliant digital records.
However, VAT registration also allows you to reclaim VAT on qualifying business expenses, which can reduce costs. For some businesses, particularly those selling primarily to other VAT registered organisations, voluntary registration can even be advantageous. Because the threshold operates on a rolling 12 month basis, it is wise to monitor your turnover monthly to avoid unexpected registration.
Can I reclaim VAT if the invoice is not in my company name?
A common point of confusion is whether VAT can be reclaimed on purchases when the invoice is addressed to someone else. The answer is generally no. In order to reclaim VAT, the invoice must be a valid VAT invoice and it must be in the name of the VAT registered business making the claim. If invoices are addressed to an individual or a different business, HMRC can refuse the reclaim, as it does not demonstrate that the cost was incurred by your business.
To stay compliant, ensure suppliers issue invoices correctly in the name of your VAT registered entity. This small step helps protect your VAT position and avoids unwelcome HMRC adjustments.
Final Thought
The VAT threshold for 2025 remains at £90,000, and understanding how it applies is essential for effective financial planning. Whether you are approaching the limit, considering voluntary registration or need clarity on reclaiming VAT, getting expert guidance early can save time, money and stress.
If you want tailored advice for your business, Blue Rocket Accounting can help you assess your VAT position, manage compliance and plan your next steps with confidence. Get in touch today to speak to one of our accountants.
