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UK VAT Threshold: When You Must Register and the Rolling 12 Month Trap

As of October 2026, the UK VAT registration threshold is £90,000. You must register if your total VAT 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.

The figure is easy to remember. The way it's measured is what catches small business owners out. It isn't your turnover for the tax year or your accounting year; it's any rolling 12 months, checked at the end of every month. Here's how the test works, with GOV.UK's own examples.

UK VAT thresholds at a glance

ThresholdAmount (GOV.UK, October 2026)What it means
RegistrationMore than £90,000 taxable turnoverYou must register
DeregistrationLess than £88,000 taxable turnoverYou can cancel your registration (optional)
Flat Rate SchemeJoin at £150,000 or less, leave above £230,000A simpler way to work out VAT
Cash Accounting SchemeJoin at £1.35 million or less, leave above £1.6 millionAccount for VAT when you're paid
Annual Accounting SchemeJoin at £1.35 million or less, leave above £1.6 millionOne return a year with advance payments
Non-UK businesses supplying the UKNo thresholdMust register whatever the turnover

The rolling 12 month test

GOV.UK says you must register if your total taxable turnover for the last 12 months goes over £90,000. You then have 30 days from the end of the month you went over to register, and your effective date of registration is the first day of the second month after you go over.

GOV.UK's example: on 15 July your total taxable turnover for the last 12 months reaches £100,000, the first time you've gone over. You must register by 30 August, and your effective date is 1 September. From that date you charge VAT on your sales, so the practical job is a monthly check of the last 12 months' sales, not a once-a-year look.

The 30 day forward-look test

There's a second test that catches businesses landing one big contract. You must register if you realise your taxable turnover is going to go over £90,000 in the next 30 days on its own. GOV.UK's example: on 1 May you agree a £100,000 contract to be paid at the end of May. You must apply by 30 May, and your effective date of registration is 1 May, the date you realised, not the date the payment arrives.

What counts towards taxable turnover

Taxable turnover is everything you sell that isn't VAT exempt or out of scope. GOV.UK says it also includes:

  • Zero-rated and reduced-rated goods, not just standard-rated ones
  • Goods you hired or loaned to customers
  • Business goods used for personal reasons
  • Goods you bartered, part-exchanged or gave as gifts
  • Services from businesses abroad that you had to reverse charge
  • Building work over £100,000 your business did for itself

Two rules surprise people. Zero-rated sales count, so a business selling mostly zero-rated goods can still cross the threshold. And reverse-charge services from overseas suppliers count too: if you buy software, advertising or freelance services from abroad, those can push you over even though they're purchases. If you advertise on Facebook, my guide to whether Facebook charges VAT on ad spend explains how that one is handled.

Late registration, temporary spikes and taking over a business

  1. Late registration: GOV.UK says you must pay VAT on any sales since the date you should have registered, and you might pay a penalty depending on how much you owe and how late you are.
  2. A one-off spike: you can apply for a registration exception if you go over the threshold temporarily. HMRC writes to confirm; if it refuses, it registers you.
  3. Taking over a VAT-registered business: you must register if the combined taxable turnover of the new and existing business is over the threshold.
  4. Only exempt or out of scope sales: you don't have to register at all.
  5. Voluntary registration: you can choose to register below £90,000.

Late registration is the costly one, because the VAT is due on sales you've already made, often without having charged it to customers. That's why the monthly check matters more than the threshold figure.

How to check your turnover each month

  1. At the end of each month, add up your taxable sales for the previous 12 months, including that month.
  2. Include zero-rated and reduced-rated sales, goods you hired out, and any reverse-charge services you bought from abroad.
  3. Leave out VAT exempt and out of scope sales.
  4. If the total is over £90,000, note the date: you have 30 days from the end of that month to register.
  5. Before signing any large contract, ask whether it alone would take you over £90,000 in the next 30 days.

Should you register voluntarily?

You can register below £90,000. Whether it helps depends on who your customers are: VAT-registered business customers can usually reclaim the VAT you charge, while consumers can't, so adding VAT to consumer prices is harder. If you're weighing up your structure at the same time, sole trader versus limited company covers that decision; VAT registration applies to both.

My verdict

Put a monthly reminder in your diary to add up the last 12 months of taxable sales, including zero-rated sales and any reverse-charge services, and start planning when you pass about £80,000. If one deal will take you over £90,000 within 30 days, register from the day you know. Paying VAT on sales you never charged it on is the mistake that hurts.

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Frequently asked questions

What is the VAT threshold in the UK?

As of October 2026, GOV.UK gives the VAT registration threshold as £90,000 of total taxable turnover.

Is the VAT threshold based on the tax year?

No. GOV.UK says you must register if your total taxable turnover for the last 12 months goes over £90,000, so it's a rolling 12 month test.

How long is there to register for VAT once you go over?

You have to register within 30 days of the end of the month when you went over the threshold.

Do zero-rated sales count towards the VAT threshold?

Yes. GOV.UK includes zero-rated and reduced-rated goods in taxable turnover.

When can I deregister for VAT?

GOV.UK says you can cancel your VAT registration if your taxable turnover is less than £88,000.

Do overseas businesses have a VAT threshold in the UK?

No. GOV.UK says businesses based outside the UK that supply goods or services to the UK must register regardless of taxable turnover.

What happens if I register for VAT late?

You must pay VAT on any sales since the date you should have registered, and you might need to pay a penalty.

Published and maintained by the Lilach Bullock team, covering marketing, AI and business growth.
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