Guide
When do you need to register for VAT? The £90,000 threshold explained
The VAT threshold is simple to state and easy to get wrong in practice, because it is tested on a rolling basis every month, not once a year.
In short
You must register for VAT if your VAT-taxable turnover in any rolling 12-month period goes over £90,000, or if you expect it to go over £90,000 in the next 30 days alone. Under the historic test, you have 30 days from the end of the month in which you crossed the threshold to register.
The two tests
| Test | When it applies | Deadline to register | Registered from |
|---|---|---|---|
| Historic (backward-looking) | Taxable turnover in the last 12 months exceeds £90,000 | Within 30 days of the end of the month you went over | The first day of the second month after you went over |
| Future (forward-looking) | You expect taxable turnover in the next 30 days alone to exceed £90,000 | By the end of those 30 days | The date you realised you would go over |
The historic test is a rolling 12 months, not your financial year or the tax year. A business growing quickly can cross it in the middle of the year without noticing, so we check it at every month end for clients near the limit.
What counts as taxable turnover
Everything that is not VAT-exempt: standard-rated, reduced-rated and zero-rated sales all count. Exempt supplies, such as most residential rent, insurance and some financial services, do not. A business that only makes zero-rated sales can apply for an exception from registering.
Should you register voluntarily?
Voluntary registration often makes sense when:
- Your customers are VAT-registered businesses that can reclaim the VAT you charge.
- You pay significant VAT on costs or equipment that you could reclaim.
- Your sales are zero-rated, so you would receive regular VAT repayments.
It rarely makes sense when you sell mainly to consumers, who cannot reclaim VAT, because the price must either rise by 20% or your margin falls.
After you register
- Charge VAT from your effective date of registration and show your VAT number on invoices.
- Keep digital records and file returns through Making Tax Digital compatible software.
- Consider the cash accounting, flat rate or annual accounting schemes; see VAT returns.
If you have registered late
HMRC can charge the VAT you should have accounted for from the date you ought to have registered, even if you did not charge it to customers, plus a penalty. Registering as soon as the problem is found, and working out the exposure accurately, keeps the cost down.
Common questions
Questions we are often asked
£90,000 of VAT-taxable turnover. You must register if your turnover in any rolling 12 months goes over £90,000, or if you expect to go over it in the next 30 days alone. You can deregister if turnover is expected to fall below £88,000.
Under the historic test, 30 days from the end of the month in which your rolling 12-month turnover went over £90,000. You are then registered from the first day of the second month after you went over.
Turnover. It is the total value of your VAT-taxable sales, before any costs, including zero-rated sales but excluding exempt ones.
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