The UK VAT registration threshold is £90,000. You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period (not the tax year or calendar year), or if you expect to exceed it in the next 30 days alone. Once you cross the threshold, you have 30 days to register, and your VAT-registered status starts from the first day of the second month after you went over. Businesses below £90,000 can register voluntarily if it benefits them. Missing the deadline can mean paying VAT you never charged your customers, out of your own pocket, backdated to when you should have registered.
The VAT threshold catches more businesses off guard than almost any other tax rule, mostly because of one detail people miss: it isn't measured against your tax year or the calendar year. It's a rolling 12-month window, recalculated constantly. A business can be nowhere near the threshold in January and legally required to register by June, without a single dramatic month — just steady growth adding up over a year.
01 The threshold: £90,000, and what counts toward it
Since April 2024, the VAT registration threshold has been £90,000 of taxable turnover, up from £85,000. Taxable turnover means the total value of everything you sell that isn't VAT-exempt — it's not your profit, and it's not just the sales you happen to think of as "the business." Freelance work, product sales, consulting fees, and most services all count. A handful of specific supplies (insurance, some education, most residential property rent) are exempt and don't count toward the threshold at all.
02 The rolling 12-month test, worked example
Every month, you're meant to check: what did I turn over in the past 12 months, ending today? Not the tax year to date. Not the calendar year. The trailing 12 months, recalculated on a rolling basis.
Marcus crossed £90,000 partway through August, not because of one big invoice, but because the retainer client he signed in March pushed his rolling total over the line five months later. He has 30 days from the end of August to register. Missing it isn't really an option — the obligation exists the moment the rolling total crosses £90,000, whether or not he happened to notice.
Check this monthly, not annually. Waiting until your year-end accounts to review turnover is how businesses miss the threshold by months. The rolling test doesn't wait for your accounting calendar.
03 The 30-day forward-looking test
There's a second, separate trigger that catches businesses growing fast: if you expect your turnover in the next 30 days alone to exceed £90,000, you must register immediately — you don't wait for the rolling 12-month total to catch up. This typically applies to a business that lands one very large contract or project, where a single month's income alone would blow past the annual threshold.
04 When registration actually takes effect
| Trigger | Registration deadline | VAT-registered from |
|---|---|---|
| Rolling 12-month total exceeds £90,000 | 30 days from the end of the month you exceeded it | First day of the second month after you exceeded it |
| Expect to exceed £90,000 in the next 30 days | By the end of that 30-day period | The date you realised, not a later date |
In Marcus's case: he crossed the threshold at the end of August 2026. He must register by 30 September 2026, and his VAT registration takes effect from 1 October 2026 — the first day of the month after his registration deadline, not the day he actually applies.
05 Registering voluntarily below the threshold
Nothing stops a business well under £90,000 from registering anyway. Common reasons: reclaiming VAT on business purchases and setup costs, appearing more established to VAT-registered clients who expect an invoice with VAT on it, or preparing in advance for growth that's clearly coming. The trade-off is real too — you then have to charge VAT on everything you sell, which makes you 20% more expensive to any customer who can't reclaim it themselves, typically the general public rather than other VAT-registered businesses.
06 What happens if you miss the deadline
- You still owe the VAT, even if you never charged it. HMRC backdates your registration to when you should have registered, and you owe VAT on everything you sold from that date — usually out of your own margin, since you can't retroactively invoice past customers for VAT you didn't originally charge.
- Late registration penalties apply on top, calculated as a percentage of the VAT due, increasing the longer the delay continues.
- You may owe interest on the VAT that should have been paid from the date registration should have started.
07 How to register
Registration is done online through your HMRC business tax account. You'll need your business details, turnover figures, and bank account information. Once registered, you're also automatically brought into Making Tax Digital for VAT, meaning you need MTD-compatible software (Xero, QuickBooks, FreeAgent and similar) to keep digital records and file your VAT returns — typing figures manually into HMRC's portal is no longer compliant.
08 Frequently asked questions
No. It's a continuously rolling 12-month test, recalculated at the end of every month, not something that resets on 6 April or 1 January. You need to check your trailing 12-month turnover regularly, not just once a year.
Yes. The rolling 12-month test looks at all your taxable turnover in that period, regardless of your VAT status at the time. It's specifically the test that determines when you become required to register in the first place.
You can apply to deregister if you expect your taxable turnover to fall below the deregistration threshold (currently £88,000) in the next 12 months, but it's not automatic — you have to apply, and HMRC has to agree.
It depends on whether they're genuinely separate businesses or effectively the same trading activity. HMRC can treat artificially separated businesses as one for VAT purposes if the split looks designed mainly to stay under the threshold, so this needs proper professional assessment rather than assumption.
Often yes. If your customers can reclaim the VAT you charge them, adding 20% to your invoice costs them nothing net, while you gain the ability to reclaim VAT on your own business purchases — a genuine saving with little downside in that specific situation.
Close to the threshold, or not sure where you stand?
DKAT Accountants checks your rolling turnover, confirms your registration position, and handles the full VAT registration and MTD setup on a fixed fee.
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