The VAT registration threshold is £90,000 of taxable turnover. Growing businesses often cross it without noticing, because the test is not based on the tax year or your accounting year.
The two tests
- Looking back: if your taxable turnover for the last 12 months goes over £90,000, you must register within 30 days of the end of the month in which you went over.
- Looking forward: if you expect your turnover in the next 30 days alone to go over £90,000, you must register by the end of those 30 days.
Check the rolling total at the end of every month. A strong summer or one large contract can tip you over.
Why timing matters
If you register late, HMRC can ask for VAT on every sale you made since the date you should have registered — whether or not you charged it to your customers. That money usually comes straight out of profit, and penalties can apply on top.
Should you register voluntarily?
Registering below the threshold can make sense if most of your customers are VAT-registered businesses, or if you buy a lot of equipment and want to reclaim the VAT on it. If you sell mainly to the public, adding 20% to your prices may cost you customers.
Schemes worth knowing
- Flat Rate Scheme: pay a fixed percentage of turnover, available if your taxable turnover is £150,000 or less.
- Cash Accounting Scheme: pay VAT when customers pay you, rather than when you invoice.
- Annual Accounting: one return a year with regular interim payments.
How we help
We monitor your rolling turnover monthly, tell you before you reach the threshold, handle the registration and file your VAT returns through Making Tax Digital software.
This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.
