Most UK sole traders panic about VAT unnecessarily. Here's everything that actually matters.
The £90,000 threshold
You must register for VAT when your taxable turnover in the last 12 months exceeds £90,000. You can register voluntarily below that.
Threshold rolls forward — it's any 12-month window, not just the tax year.
Which scheme?
| Scheme | Who it suits |
|---|---|
| Standard | Most businesses |
| Flat Rate | Service businesses with low costs (you pay a flat % on gross revenue) |
| Cash Accounting | You only owe VAT when invoices are actually paid |
| Annual Accounting | One return per year instead of four |
Standard VAT rates
- 20% — most goods and services
- 5% — domestic energy, some health products
- 0% — books, children's clothes, most food
How to invoice
Once registered, your invoices need:
- Your VAT number
- Date of supply
- VAT rate per line
- Total VAT amount
Ledgerly Pro adds all this automatically once you toggle on VAT in Settings → Business.
Reclaiming VAT
You can reclaim VAT on business purchases. Keep the receipts — HMRC can ask for evidence up to 6 years later.
Quarterly returns
Submit a VAT return every 3 months via MTD-compatible software. Ledgerly Pro prepares the figures; your accountant or the HMRC bridging software submits.
Next read: Self-Assessment Deadline Checklist