When you must register for VAT
There are two tests. You must register if either applies:
- The rolling 12-month test: your total taxable turnover for the last 12 months goes over £90,000. This is any 12-month period, not your tax year or calendar year, so check it at the end of every month.
- The 30-day test: you expect your taxable turnover in the next 30 days alone to go over £90,000 — for example, because you've won a large contract.
Registration deadlines
| Test | Register by | Registration takes effect |
|---|---|---|
| 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'd go over |
Example: your rolling total goes over £90,000 at the end of January. You must register by 2 March, and you'll be VAT registered from 1 March. From that date you must charge VAT on your sales.
What counts as taxable turnover
Taxable turnover is the total value of everything you sell that isn't exempt from VAT. It includes:
- Standard-rated, reduced-rate and zero-rated sales — zero-rated sales count even though no VAT is charged
- Goods you hire or loan to customers
- Business goods used for personal reasons
It does not include exempt sales, such as most insurance or financial services, or sales that are outside the scope of UK VAT. Use your sales figures, not your profit.
If you are below the threshold
You don't have to register, but you can register voluntarily. That can make sense if most of your customers are VAT registered businesses or you have high VAT costs to reclaim. It is usually less attractive if you sell mainly to the public, because your prices would go up by the VAT.
Deregistering
If your taxable turnover is expected to fall below £88,000 in the next 12 months, you can ask HMRC to cancel your registration.
Frequently asked questions
Is the VAT threshold based on profit or sales?
Sales. It is your taxable turnover, before any costs are taken off.
Is it over or equal to £90,000?
You have to register when your turnover goes over £90,000. Exactly £90,000 is not over the threshold.
What happens if I register late?
You'll have to pay HMRC the VAT you should have charged from your effective registration date, and you may get a penalty. Register as soon as you know you've gone over.
Does the threshold apply to sole traders?
Yes. It applies to sole traders, partnerships and limited companies alike. A sole trader's turnover from all their businesses counts together.