VAT registration is not just a question to ask at your year-end. A growing business needs to monitor taxable sales throughout the year, because the main threshold test uses a rolling 12-month period.
The original image refers to the former £85,000 threshold. It is retained as part of our historical tax-tip series. The threshold checked for this updated guide is £90,000; the old figure should not be used for current decisions.
What is the VAT registration threshold?
You must register if your VAT-taxable turnover exceeds £90,000 over the previous 12 months. There is also a separate test if you expect taxable turnover to exceed £90,000 in the next 30 days alone.
Taxable turnover is not the same as profit. Business expenses do not reduce it. It includes relevant taxable sales, including zero-rated sales; exempt supplies need different treatment. Overseas transactions or unusual supplies may require a closer review.
How do you calculate the rolling total?
At each month-end, add the taxable sales for that month and the preceding 11 months. When the next month finishes, drop the oldest month and add the newest. This rolling window may not match your accounts year or the personal tax year.
For example, a business can finish its accounting year below the threshold yet exceed it a few months later after winning a large contract. Waiting for the next annual accounts could make registration late.
When must you tell HMRC?
Under the past-12-month test, registration is required within 30 days of the end of the month in which the threshold was exceeded. The effective date is normally the first day of the second month after the breach. The next-30-days test has a different timing rule, so a major new contract deserves prompt attention.
Prepare before changing your invoices
- Check the correct registration date.
- Review whether quoted prices include or exclude VAT.
- Identify the VAT treatment of each type of sale.
- Set up bookkeeping and compliant VAT records.
- Consider how VAT payments affect cash flow.
Do not assume every sale attracts 20% VAT or every purchase allows recovery. The nature of the supply, evidence and business use matter.
Should you register voluntarily?
Registration below the threshold can suit some businesses, but it is not automatically beneficial. Customer type, pricing, recoverable VAT and administration all affect the decision. A forecast comparing the options is more useful than judging registration solely by turnover.
Try our VAT threshold calculator, learn about VAT and Making Tax Digital support, or book a consultation.
Reviewed 2 October 2026. Source: GOV.UK VAT registration guidance. Specific registration rules can apply to businesses outside the UK.