The UK VAT registration threshold is £90,000. If your business's taxable turnover goes over that amount in any 12-month period, you must register for VAT. It sounds simple, but the way the 12 months are counted catches out a lot of small businesses. This guide explains exactly how the threshold works.
Key figures: registration threshold £90,000. Deregistration threshold £88,000. Both have applied since 1 April 2024. Before that, the registration threshold was £85,000.
The two tests
You must register for VAT if either of these applies:
1. The rolling 12-month test (looking back)
At the end of every month, add up your taxable turnover for that month and the 11 months before it. If the total is over £90,000, you must register.
This is a rolling 12 months. It is not your tax year, your accounting year or the calendar year. A business can be under the threshold for its financial year and still go over it on a rolling basis.
2. The 30-day test (looking forward)
If at any point you expect your taxable turnover in the next 30 days alone to be over £90,000, you must register straight away. This usually happens when a business wins a single large contract or order.
A rolling 12-month example
Sam runs a small design studio. Monthly sales are steady at around £7,000 but pick up in the autumn:
| Period | Rolling 12-month total | Over £90,000? |
|---|---|---|
| 12 months to 31 July | £84,000 | No |
| 12 months to 31 August | £87,500 | No, but close |
| 12 months to 30 September | £91,200 | Yes |
Sam went over the threshold at the end of September. The deadlines below apply from that point.
Registration deadlines
| Test | You must register by | You're VAT registered from |
|---|---|---|
| Rolling 12 months | 30 days after the end of the month you went over | The first day of the second month after you went over |
| Next 30 days | The end of that 30-day period | The date you realised you would go over |
In Sam's case: over at the end of September, so Sam must register by 30 October and will be VAT registered from 1 November. From 1 November, Sam must charge VAT on sales.
Tip: the VAT Registration Calculator works out these dates for you. Enter your last 12 months of sales and it shows how close you are and, if you've gone over, your deadline and registration date.
What counts as taxable turnover
Taxable turnover is the total value of everything you sell that is not exempt from VAT. It's based on sales, not profit.
Included
- Sales at the standard rate (20%) and the reduced rate (5%)
- Zero-rated sales (0%), such as books or children's clothes — even though you'd charge no VAT on them
- Goods you hire or loan to customers
- Business goods you use for personal reasons
- Goods you bartered or part-exchanged
Not included
- Exempt sales, such as most insurance, financial services and residential rent
- Sales that are outside the scope of UK VAT
- Money that isn't from sales, such as loans you receive or capital you put into the business
If you're a sole trader, the threshold applies to you, not to each business. Turnover from all your sole trader businesses is added together.
If you go over only temporarily
If you go over the threshold because of a one-off, and you expect your taxable turnover for the next 12 months to be below the deregistration threshold of £88,000, you can ask HMRC for an exception from registering. You must apply and give evidence; don't assume it will be granted.
What happens if you register late
If you register late, HMRC will backdate your registration to the date you should have been registered. You'll have to pay the VAT you should have charged on sales from that date — even if you didn't charge your customers for it — and you may be charged a penalty. The VAT comes out of your own pocket, so check your rolling total every month once you're getting close.
Voluntary registration
You can register for VAT even if your turnover is below £90,000. It can make sense if:
- most of your customers are VAT-registered businesses, who can reclaim the VAT you charge; or
- you have high costs with VAT on them that you'd like to reclaim.
It's usually less attractive if you sell mainly to the public, because your prices would go up by the VAT or your margin would go down.
Deregistration threshold
If your taxable turnover is expected to fall below £88,000 in the next 12 months, you can apply to cancel your VAT registration. You must cancel if you stop making taxable supplies altogether.
Businesses based outside the UK
The £90,000 threshold does not apply to businesses that are not established in the UK. If an overseas business makes any taxable supplies in the UK, it usually has to register regardless of how much it sells.
Frequently asked questions
Is the threshold £90,000 of profit or sales?
Sales. It's taxable turnover before any costs.
What if my turnover is exactly £90,000?
You must register when turnover goes over £90,000, so exactly £90,000 doesn't trigger registration.
Does the threshold change every year?
Not automatically. The government sets it, and it was raised from £85,000 to £90,000 on 1 April 2024. Always check the current figure on GOV.UK. Our UK VAT rates page shows the figure we last checked and when.
How do I actually register?
Most businesses register online with HMRC. Our guide on how to register for VAT as a UK small business walks through the process.
Official source: GOV.UK: When to register for VAT.