UK VAT and your UK company: the £90,000 threshold and what it means for Arab directors

From 1 April 2024, the UK VAT registration threshold increased from £85,000 to £90,000. This means that if your UK company's taxable turnover exceeds £90,000 in any rolling 12-month period, you are legally required to register for VAT with HMRC. You have 30 days from the point you realise you have exceeded (or are about to exceed) the threshold to register. Registering late carries financial penalties.

The threshold applies to taxable turnover — broadly, sales of goods and services that are subject to UK VAT at the standard rate (20%), reduced rate (5%), or zero rate (0%). Exempt supplies (such as financial services or certain education) do not count toward the threshold. Most Gulf directors running a UK company do not hit £90,000 in UK taxable turnover, particularly if the company's trading is primarily outside the UK. A UK company that solely receives director salary or dividends, or holds UK property for rental, may have specific VAT implications but will rarely trigger mandatory registration.

Voluntary VAT registration is possible below the threshold and has advantages: you can reclaim VAT on business purchases and expenses, and appearing VAT-registered can signal credibility to UK business partners. However it also adds compliance — quarterly VAT returns filed digitally under Making Tax Digital (MTD), and VAT invoicing requirements on every sale.

Non-Established Taxable Persons (NETP): if you run your UK company from outside the UK and have no fixed UK business establishment, HMRC classifies you as an NETP. This matters because NETPs who supply certain digital services to UK consumers may have VAT obligations regardless of turnover level. If your UK company sells digital goods or services to UK individuals, take advice on whether the NETP rules apply before assuming you are below the threshold.

How to register: entirely online via the HMRC VAT registration portal. A UK Government Gateway account is needed. The process takes 10–20 business days once submitted, though VAT numbers can take longer during peak periods. Your UK accountant or corporate service provider can register on your behalf using Agent Services. Fileminder can advise on whether registration is appropriate for your company's specific trading pattern.