When to register for VAT: thresholds, tests and deadlines

When to register for VAT: the £90,000 threshold

The GOV.UK register for VAT page calls £90,000 "the VAT threshold". If your taxable turnover passes it, registration is compulsory. If you're a VAT-registered business and your turnover later drops below £88,000, you can ask to cancel, but cancelling is optional.

The threshold isn't based on your tax year or accounting year, which catches people out. Knowing when to register for VAT means watching a moving 12-month window, not waiting for your year-end figures.

Test 1: the rolling 12 months

At the end of each month, add up your taxable turnover for the previous 12 months. If the total is over £90,000, you must register. GOV.UK gives two dates you need to know:

1. 1

   The month you go over

   Say your 12-month total first passes £90,000 at the end of June.

2. 2

   When to register for VAT by

   You have 30 days after the end of that month, so you must register by 30 July.

3. 3

   Your effective date

   GOV.UK says it's "the first day of the second month after you go over the threshold". In this example, that's 1 August. You charge VAT on sales from then.

A small habit helps here, because when to register for VAT is decided month by month. On the first working day of each month, total the last 12 months of sales in your records or bank statements. If you're getting close, you'll know when to register for VAT weeks before the deadline, not after it.

Test 2: the next 30 days

The second test looks forward. You must register if you expect your taxable turnover to go over £90,000 in the next 30 days on its own. This matters if you land one large contract or a big order, even in your first month of trading.

Here's an example of when to register for VAT on a single job. A joinery business signs a £95,000 fit-out contract on 10 March, to be invoiced and paid within the month. On 10 March it knows the next 30 days alone will pass £90,000. It must register by the end of that 30-day period, and GOV.UK says the effective date is "the date you realised", not the date turnover actually went over.

So when to register for VAT under this test depends on when you knew, not when you were paid. Keep notes of when big orders are agreed.

What counts as taxable turnover

HMRC's VAT Notice 700/1 defines taxable turnover as the total value of your taxable supplies made in the UK. That includes zero-rated sales, which surprises some people: you may charge 0% VAT on them, but they still count towards the threshold.

Counts

Standard-rated (20%), reduced-rate (5%) and zero-rated (0%) sales of goods and services.

Doesn't count

Exempt supplies, and sales of capital assets such as equipment or vehicles you've used in the business.

Not the same as profit

The threshold is based on sales, before you take off any costs.

If some sales may be exempt or zero-rated, read the notice or ask an accountant before you decide when to register for VAT. The difference between exempt and zero-rated changes the answer.

A temporary spike? If you go over the threshold but can show your turnover won't pass £88,000 in the next 12 months, HMRC lets you apply for an "exception". HMRC confirms in writing whether you get one. If it doesn't agree, it registers you.

Choosing when to register for VAT yourself

Below the threshold, when to register for VAT is your choice. GOV.UK calls this voluntary registration. Whether it suits you depends on who your customers are and what you buy.

VAT Notice 700/1 also says you can backdate a voluntary registration by up to 4 years, and may be able to reclaim VAT on some goods bought up to 4 years before, and on services up to 6 months before, your registration date. These rules have conditions, so check the notice before you rely on them.

If you register late

Missing the moment when to register for VAT doesn't make the tax go away. GOV.UK says that if you register late, "you must pay VAT on any sales you've made" from the date you should have been registered, even if you didn't charge it to customers. That VAT then comes out of your margin.

You may also face a penalty for getting when to register for VAT wrong. HMRC's notice explains that the penalty depends on how much VAT is due and how late you are. If you think you've already passed when to register for VAT, register straight away and speak to an accountant about the figures.

What changes once you're registered

The How VAT works guide on GOV.UK lists what VAT-registered businesses must do:

• charge VAT at the correct rate on taxable sales
• keep records of the VAT you pay on business purchases
• send a VAT return to HMRC, usually every 3 months
• pay HMRC any VAT you owe, or get a repayment if you paid more than you charged

VAT returns also fall under Making Tax Digital. HMRC's notice says businesses must keep digital records and submit returns using compatible software, unless an exemption applies. If you're a sole trader, our separate guide to Making Tax Digital for sole traders covers the newer Income Tax rules, which work alongside VAT.

VAT accounting schemes: an overview

Once you know when to register for VAT, the next question is how you'll account for it. HMRC offers schemes that change when or how you work out your bill. Each has its own eligibility rules.

Which scheme, if any, suits you is a question for an accountant, ideally at the same time as you plan when to register for VAT. The thresholds above come from GOV.UK's VAT thresholds page.

Your bank account and VAT

Once you're registered, part of every sale you take belongs to HMRC. Some people find it easier to move that slice into a separate pot or savings account as payments arrive, so the quarterly bill doesn't come as a shock. A separate business bank account also makes the monthly check on when to register for VAT quicker, because every payment in is a sale.

If you're comparing accounts, look at bookkeeping links, receipt capture and savings pots. You can compare business bank accounts side by side. Tide, our featured partner, includes Making Tax Digital tools on all its plans and offers a Tax Saver for setting money aside; read our Tide review for the details.

Tide is our featured partner. We may earn commission from referrals. Disclosure

Monthly VAT checklist

• I've totalled my taxable turnover for the last 12 months at month end.
• I've included zero-rated sales and left out exempt sales and asset sales.
• I've checked whether any single contract could pass £90,000 in the next 30 days.
• I know when to register for VAT by if I've gone over.
• I've thought about whether voluntary registration suits my customers.
• I've asked an accountant about schemes before I register.

When to register for VAT: FAQs

Sources

• GOV.UK: Register for VAT (checked 25 October 2026)
• GOV.UK: VAT thresholds (checked 25 October 2026)
• GOV.UK: How VAT works (checked 25 October 2026)
• HMRC: VAT Notice 700/1, Who should register for VAT, on GOV.UK (checked 25 October 2026)
• Tide pricing page for plan features (checked 25 October 2026)