Be careful not to jump in to the opportunity of foregoing the PAYE employee position with your existing full time employer and convert to being a contract self-employed pilot....this usually means when it comes to letting people go you are the first out, as you aren't an employee but merely a disposable expense such as the coffee and biscuits bill! Overly-simplistic I know, and I am sure some agency pilots will now leap in with the merits of their arrangements.
From what you say VAT registration is the way to go. If all your customers are VAT registered then you are no more expensive to them than one who isn't, as they are reclaiming your VAT element. Indeed you may reclaim VAT for expenses incurred with direct connection to the business .
For your own protection, you SHOULD (not must) use an accountant for your annual balance sheet & profit and loss accounts. By doing your own book keeping you can reduce their fee to two or three hundred quid pa, and it is peace of mind subscribing to their insurance policy (circa £150) against HMRC investigations which allows you to use them to fight your corner without incurring a huge bill.