VAT registration and the £90,000 threshold
11/11/2026
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The VAT registration threshold is £90,000. You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days alone. If you go over on the rolling 12-month test, you have 30 days from the end of that month to register.
This guide explains how the VAT registration threshold works for sole traders, partnerships and limited companies, what counts towards it, your effective date of registration, and what happens if you register late.
What is the VAT registration threshold?
The VAT registration threshold is the level of taxable turnover at which registering for VAT becomes a legal requirement. It has been £90,000 since 1 April 2024, and the same figure applies whatever your business structure.
There is also a lower deregistration threshold of £88,000. If your taxable turnover falls below that level, you can ask HMRC to cancel your registration.
| Threshold | Amount | What it means |
|---|---|---|
| Registration threshold | £90,000 | You must register if taxable turnover goes over this |
| Deregistration threshold | £88,000 | You can ask to cancel if taxable turnover falls below this |
| Voluntary registration | Any turnover | You can choose to register below £90,000 |
Once registered, most businesses charge VAT at the standard rate of 20%, with reduced (5%) and zero (0%) rates for some goods and services.
How to check whether you have passed the VAT registration threshold
There are two separate tests, and you must register if you meet either of them. Checking both regularly is the simplest way to avoid registering late.
What counts as taxable turnover
Taxable turnover is the total value of everything you sell that is not VAT exempt or outside the scope of VAT. It includes:
- standard-rated, reduced-rated and zero-rated sales;
- goods you hired or loaned to customers;
- business goods used for personal reasons;
- goods you bartered, part-exchanged or gave as gifts;
- services from overseas businesses that you had to reverse charge.
Zero-rated sales are easy to overlook. No VAT is charged on them, but they still count towards the VAT registration threshold. If you only sell exempt or out-of-scope goods and services, you do not have to register.
The rolling 12-month test
For this test, add up your taxable turnover for the previous 12 months at the end of every month. This is a rolling period, not your tax year or your accounting year, so the total changes each month.
For example, if on 15 July your taxable turnover for the last 12 months reaches £100,000 for the first time, you must register by 30 August. Your effective date of registration is 1 September.
Keeping your records up to date makes this test straightforward. Our bookkeeping services can track your rolling turnover so you can see the threshold coming.
The 30-day forward-look test
You must also register if you realise your taxable turnover will go over the VAT registration threshold in the next 30 days alone, for example because of a single large contract.
If on 1 May you agree a £100,000 contract that will be paid at the end of May, you must apply by 30 May. Your effective date of registration is 1 May, the date you realised, not the date you are paid.
Registration deadlines and your effective date
Once you pass the VAT registration threshold, your effective date of registration is the date from which you must account for VAT on your sales. It depends on which test you met.
| Test you met | Register by | Effective date of registration |
|---|---|---|
| Rolling 12-month turnover over £90,000 | 30 days after the end of the month you went over | First day of the second month after you went over |
| Expect to go over £90,000 in the next 30 days | The end of that 30-day period | The date you realised you would go over |
| Voluntary registration | When you choose | Agreed with HMRC when you apply |
How to register for VAT
Most businesses register online through HMRC’s VAT registration service. You need to sign in, and you can save your application and return to it later.
What you need before you start
| Information | Limited company | Sole trader or partnership |
|---|---|---|
| Identification | Company registration number | National Insurance number and an identity document |
| Tax references | Unique Taxpayer Reference (UTR) | UTR, if you have one |
| Bank details | Business bank account | Bank account |
| Turnover | Annual turnover and a 12-month estimate | Annual turnover and a 12-month estimate |
If you are not sure where your UTR is, our guide on how to find your UTR number lists five quick places to check.
After you register
HMRC sends your VAT registration certificate, usually within 30 working days, either to your VAT online account or by post. It shows your 9-digit VAT number, your effective date of registration and details of your first VAT return and payment. HMRC will also sign your business up to Making Tax Digital for VAT, so you must keep digital records and file returns using compatible software.
Use your VAT online account to view your certificate and manage your VAT.
Invoicing while you wait for your VAT number
You cannot show VAT on invoices until you have your VAT number, but you can increase your prices to cover the VAT you will owe from your effective date. Once the number arrives, reissue those invoices showing the VAT so VAT-registered customers can reclaim it.
Should you register for VAT voluntarily?
You can register voluntarily if your taxable turnover is below the VAT registration threshold. Whether that makes sense depends mainly on who your customers are and how much VAT you pay on your costs.
| Consideration | Voluntary registration can help when | It can work against you when |
|---|---|---|
| Customers | Most customers are VAT-registered businesses that can reclaim VAT | Most customers are consumers who cannot reclaim VAT |
| Costs | You pay significant VAT on stock, equipment or services | Your costs carry little VAT |
| Pricing | You can absorb or pass on VAT without losing work | Adding 20% would make you less competitive |
| Administration | Your records are already digital and up to date | You do not yet have time or software for VAT returns |
A business that mostly sells zero-rated goods often receives repayments from HMRC, which can make voluntary registration worthwhile.
Exceptions and exemptions from registration
If your turnover goes over the VAT registration threshold only temporarily, you can apply for a registration exception. You will need to give HMRC evidence that the increase is temporary. HMRC writes to confirm its decision; if it refuses, it registers you.
If most of your taxable sales are zero-rated, you can ask HMRC for an exemption from registration. Both requests must be made through HMRC rather than assumed.
What happens if you register late
If you register late, you must pay HMRC the VAT due on sales made since the date you should have been registered. You usually cannot recover this from customers you have already invoiced, so it often comes out of your profit.
HMRC may also charge a late registration penalty, depending on how much VAT you owe and how late you registered. GOV.UK sets out how these penalties work in its late registration penalty guidance.
If you think you passed the VAT registration threshold some time ago, register as soon as possible and take advice on the VAT you owe.
Cancelling your VAT registration
If your taxable turnover falls below £88,000, you can ask HMRC to cancel your registration. You must cancel within 30 days if you stop being eligible, for example because you stop trading or making taxable supplies.
You will need to submit a final VAT return and keep your VAT records for six years. HMRC’s full VAT registration guidance covers the less common cases, such as taking over a VAT-registered business.
Need help with VAT registration?
If your turnover is approaching the VAT registration threshold, or you are weighing up voluntary registration, our VAT accountants can check your figures, handle the registration and file your returns under Making Tax Digital. Book a free consultation to talk through whether and when your business should register.
This article provides general information only and is not personalised tax, accounting or legal advice. Requirements depend on your circumstances, so take professional advice before acting.
Fusion Accountants is a firm of ICAEW Chartered Accountants supporting sole traders, partnerships and limited companies across the UK. Book a free consultation with Fusion Accountants to talk through whether and when your business should register for VAT.
