Once you're VAT registered, you charge VAT from your effective date of registration, so every invoice from then on has to show it and every client has to start paying the VAT-inclusive amount. Tell clients before the first VAT invoice goes out, update your invoice settings, and check each recurring payment: clients on direct debit pay the new invoice amount automatically, but clients on standing orders have to change the amount themselves.
In this article
The short version
- You charge VAT from your effective date of registration, once taxable turnover goes over £90,000.
- Until your VAT number arrives you can't show VAT on invoices, but you still owe it.
- Tell clients the date, the new amount and what they need to do before the first VAT invoice.
- Direct debit collects the new invoice amount; standing orders stay at the old figure until clients change them.
- Check every recurring payment in the first month and chase anyone still paying the old amount.
When you start charging VAT
You have to register for VAT if your taxable turnover for the last 12 months goes over £90,000, checked at the end of each month. You then have 30 days from the end of that month to register, and your effective date of registration is the first day of the second month after you went over. If you expect to go over £90,000 in the next 30 days alone, you register by the end of that 30-day period, and the effective date is the day you realised.
From your effective date, you charge VAT on your taxable sales and can reclaim VAT on your purchases. There's often a gap between that date and HMRC sending your VAT number. During the gap you can't show VAT on your invoices, but you still owe it on sales from the effective date. HMRC's guidance is to raise your prices to cover the VAT and tell clients why, then reissue those invoices showing VAT once your number arrives.
Work out the effective date as soon as you can see you're getting close to the threshold. It gives you time to tell clients before the first VAT invoice, not after.
What to tell your clients and when
Start by looking at how your engagement letters, proposals or terms state your fees. If they say fees are plus VAT where applicable, clients have already agreed to it in principle and the letter is a notice. If they quote a single figure, agree the new amount with each client before the first VAT invoice, and take advice if you're unsure where you stand.
For most businesses, VAT registration affects two groups of clients differently. Clients who are VAT registered themselves can usually reclaim the VAT you charge, so the change is mostly about cash flow and paperwork for them. Clients who aren't registered, including individuals, pay the full 20% more unless you decide to absorb some or all of it.
Your letter needs four things: the date you're registered from, your VAT number (or that it's on its way), the new amount each client will pay, and what they need to do. Keep it short. Something like:
We've registered for VAT from 1 March. From that date our invoices will include VAT at 20%, so your monthly fee of £300 becomes £360. If you pay by direct debit, you don't need to do anything. If you pay by standing order, please change it to £360 before your payment on 1 March.
Send it a few weeks before the effective date, or as soon as you've applied if the date has already passed.
Move recurring payments onto the new amount
How much work this takes depends on how each client pays you.
| How the client pays | What happens to the amount | What you need to do |
|---|---|---|
| Direct debit | You collect the new invoice amount with advance notice | Update the invoices; the client is told before collection |
| Standing order | Stays at the old figure until the client changes it | Ask each client to update it, then check |
| Bank transfer per invoice | The client pays whatever the invoice says | Make sure the VAT shows on the invoice |
| Card or payment link | Follows the invoice | Update the invoice amount |
Direct debit handles VAT registration with the least effort, because the amount comes from your invoice. With Adfin, each collection takes the amount and due date of the invoice it belongs to, and the client gets an email at least three working days before each collection, so the new VAT-inclusive figure is collected under the mandate they've already signed.
Standing orders are where the gaps appear. A client who doesn't update theirs keeps paying the net figure, and you're left collecting the VAT element separately each month. If you've got a lot of clients on standing orders, registration is a good moment to offer direct debit, since you're writing to everyone anyway.
Check the first month of VAT invoices
Before the first VAT invoice goes out, check your invoice template shows everything a VAT invoice needs, including your VAT number, the VAT rate and the amount of VAT, and update your repeating invoices in Xero, QuickBooks or whatever you invoice from so they carry the right tax rate.
After the first payment date, go through every recurring payment and match it against its invoice. Anyone who's paid the old amount owes the VAT on top. Send them the difference with a way to pay, and remind them to update their standing order before the next date. Adfin's collection agents can chase part-paid invoices like these within rules you approve, and payments taken through Adfin are marked paid in Xero or QuickBooks, so you can see which clients are still short.
Related guides
- VAT invoices: what UK businesses must show
- Invoicing for UK businesses: a complete guide
- Should an accountancy practice use direct debit or standing order?
- Why is my direct debit collecting the wrong amount?
- How to reconcile VAT when you get net payouts
Common questions
When do I have to register for VAT? When your VAT taxable turnover for the last 12 months goes over £90,000, or when you expect it to go over £90,000 in the next 30 days alone.
Can I charge VAT before my VAT number arrives? You can't show VAT on invoices until you have your number, but you owe VAT from your effective date. HMRC's guidance is to raise prices to cover it, tell clients why, and reissue invoices showing VAT once the number arrives.
Do clients on direct debit need to sign a new mandate when I add VAT? No. Clients are told the new amount and date before each collection, and that notice is all the existing mandate needs.
What if a client keeps paying the old amount by standing order? Their invoice is left part paid. Ask them to update the standing order and send a request for the VAT difference already owed.
Will VAT registration cost my clients more? VAT-registered clients can usually reclaim the VAT you charge. Clients who aren't registered, including individuals, pay the extra unless you absorb it.
What has to be on my invoices once I'm VAT registered? A VAT invoice needs details including your VAT registration number, the time of supply, the VAT rate for each line and the total VAT.
Sources
- GOV.UK - Register for VAT (accurate as of November 2026) https://www.gov.uk/register-for-vat
- HMRC - VAT guide (VAT Notice 700) (accurate as of November 2026) https://www.gov.uk/guidance/vat-guide-notice-700
- Pay.UK - Types of Faster Payment transactions (accurate as of November 2026) https://www.wearepay.uk/what-we-do/payment-systems/faster-payment-system/types-of-faster-payment-transactions/
- Adfin Help Centre - What does my customer see when I use direct debit (accurate as of November 2026) https://support.adfin.com/en/articles/10199778-what-does-my-customer-see-when-i-use-direct-debit
