Every April HMRC raises the threshold for VAT registration. For 2014-15 businesses can have sales of up to £81,000 before registering for VAT. The sales value must be calculated over a rolling 12 month period and all sales must be included in the calculation unless your sales include goods or services which are VAT exempt.
You must register for VAT within 30 days of reaching the VAT threshold of £81,000 or as soon as you realise you will reach the threshold. If you do not register within this period of time you may receive a fine. You should therefore ensure you update your sales records frequently when your business is getting close to making this value of sales.
You can voluntarily register for VAT before you reach this threshold. Businesses may do this to appear larger than they are or because it is expected within their industry. Once VAT registered you can reclaim the VAT on your purchases so improving cash flow may be another reason for registering.
If you are below the threshold for VAT registration and do not wish to voluntarily register you can reclaim VAT on goods purchased up to four years prior to VAT registration and on services up to six months prior to VAT registration as long as these goods or services meet certain conditions.
You must not separate your business activities in order to avoid becoming VAT registered. Normally the sales in all businesses will be added together to determine whether or not you should be registered for VAT, however if your businesses are all separate legal entities you may not need to combine these sales.