The rate
The standard rate in the United Kingdom is 20%. Some goods and services carry reduced or zero rates and others are exempt. The difference matters: zero-rated sales still let you reclaim the tax on your purchases, exempt sales do not.
Who must register
Registration is compulsory once VAT-taxable turnover exceeds £90,000 in any rolling 12 months; you can deregister below £88,000.
How to register
A business that has gone over the compulsory limit must register within 30 days of the end of the month in which it crossed it. The effective date of registration is the first day of the second month after the breach.
A business that expects to cross the limit in the next 30 days must register by the end of that 30-day window, and the effective date is the day it realised that would happen, not the day turnover actually rose.
Registration is done with HMRC online or by post. Businesses below the limit can register voluntarily. A business based outside the UK that supplies goods or services to UK customers must register whatever its turnover.
Registering late means paying VAT on sales made since the date registration was due, and penalties may be added depending on the amount and how late registration was.
Filing and paying
Registered and filed with HM Revenue and Customs (HMRC).
Quarterly returns through Making Tax Digital software, due one month and seven days after the quarter ends, with payment by the same date.
Penalties for getting it wrong
Late submissions earn points and a £200 penalty at the points threshold; late payment interest runs from the due date.