As a virtual assistant, will I need to register for VAT?
In most cases, no, especially if you’re just starting out. You only have to register for VAT if:
- Your turnover (everything you invoice clients for) goes over £90,000 in the last 12 months, OR
- You expect to earn more than £90,000 in a single 30-day period
This is the mandatory VAT registration threshold set by HMRC for 2024. Always double-check the current threshold here: www.gov.uk/vat-registration
What is VAT anyway?
VAT (Value Added Tax) is a tax businesses charge on goods or services in the UK. If you are VAT registered, you:
- Add 20% VAT to your invoices
- Submit VAT returns (usually quarterly and usually online)
- Can reclaim VAT you’ve paid on business-related purchases
But if you’re not registered, you do not charge or reclaim VAT.
Do I have to be VAT registered if I am a Limited Company?
| Business Type | VAT Registered? |
|---|---|
| Sole Trader | Can be or not (if below threshold) |
| Limited Company | Can be or not (if below the threshold) |
So in other words – No.
VAT and your business structure are completely separate from one another.
Whether you are a sole trader or run a limited company, you can choose to register for VAT, or not, if you are not yet at the threshold.
Here’s how it works:
- If you’re a sole trader: You can register voluntarily at any time, or not at all if your turnover is under £90k.
- If you run a limited company: You can also choose whether or not to register (until you hit the threshold, when it becomes mandatory).
So, many small businesses—both sole traders and limited companies—choose not to register unless they have to.
Should I register for VAT voluntarily?
It really depends on who your clients are:
If your clients are VAT-registered businesses, you might want to register voluntarily so you can reclaim VAT on business expenses and your clients won’t mind paying VAT because they can reclaim it too.
If your clients are small businesses or sole traders, many businesses avoid registering voluntarily if they are below the threshold – adding 20% VAT makes you look more expensive. Clients who aren’t VAT registered can’t claim it back, so it comes out of their pocket.
| Scenario | Non-VAT Registered VA | VAT Registered VA |
|---|---|---|
| VA charges per hour | £35 | £35 + 20% = £42 |
| Client is not VAT registered | Pays £35 | Pays £42 (can’t reclaim) |
| Client is VAT registered | Pays £35 | Pays £42 (can reclaim £7) |
What is the Flat Rate Scheme?
A simplified VAT scheme ideal for VAs with low expenses:
- You still charge 20% VAT on invoices.
- But you pay HMRC a lower, fixed percentage of your VAT-inclusive sales.
- For most VAs, it’s 14.5% (reduced to 13.5% in your first year).
- You keep the difference as extra income — typically 5–8% profit.
Find out more about the Flat Rate Scheme here: https://www.gov.uk/vat-flat-rate-scheme
Should I register for VAT?
Ask yourself:
- Are my clients mostly VAT registered?
- Am I approaching £90k in annual turnover?
- Do I have a lot of VAT-able expenses?
- Do I want the extra admin that comes with it (quarterly returns, digital bookkeeping, etc)?
Top Tip: If your business plan forecasts over £90k turnover, build in a higher hourly rate now so your fees don’t have to jump when you register.
What do other Virtual Assistant’s do?
According to the UK VA Survey 2024:
- 2.9% of VAs reported income over the VAT threshold.
- 6% of virtual asssitants said that they were VAT registered.
- The average hourly rate for a UK VA is now £32.35/hour
So, many VAs choose to either stay under the threshold to keep admin low and pricing simple, and very few (3.1%) have registered voluntarily.
As you can see from the UK VA Survey 2024 statistics, very few VA businesses are currently registered for VAT. However, it depends very much on your client base and your proximity to the threshold. There’s no doubt, being VAT registered will increase your admin load and you will need to consider VAT bills when managing your budget, but I have seen VA businesses who have smashed that threshold, registered and are really thriving.
It is a matter of personal preference, client preference, business planning and choosing ultimately what is right for you – and armed with knowledge, you can make the correct decision.