When to register for VAT
The £90,000 threshold, the 30-day future test, what counts as taxable turnover, voluntary registration, and when you can come off the register.
You must register for VAT (value added tax) once your taxable turnover passes £90,000 over any rolling 12-month period, or as soon as you expect to pass it in the next 30 days alone. Below that you do not have to register, though you can choose to. The threshold has been £90,000 since 1 April 2024.
The short version
- Register once your taxable turnover tops £90,000 in any rolling 12-month period, or you expect to top it in the next 30 days.
- Taxable turnover counts your standard, reduced and zero-rated sales. It leaves out VAT-exempt sales and anything outside UK VAT.
- Below £90,000 you can register voluntarily. It helps if you sell to other VAT-registered businesses and hurts if you sell to the public.
- Once registered you charge VAT, file returns to HMRC, and can reclaim the VAT on your own costs.
- You can ask to deregister if your turnover drops below £88,000. Everything here is general information, not tax advice.
Here is the picture at a glance. The figures are the current UK thresholds; the standard VAT rate is 20%, with a reduced rate of 5% and a zero rate of 0% on certain goods.
| The point | Where it lands |
|---|---|
| Registration threshold | £90,000 taxable turnover, rolling 12 months |
| Future test | Expect to pass £90,000 in the next 30 days |
| What counts towards it | Standard, reduced and zero-rated sales |
| What does not | VAT-exempt and out-of-scope sales |
| Below the threshold | Voluntary registration is allowed |
| Deregistration threshold | Turnover below £88,000 |
The £90,000 threshold
The trigger to register is taxable turnover, the total value of the sales you make that VAT applies to, reaching £90,000. The number that catches people out is how it is measured. It is not your tax year and not the calendar year: it is a rolling 12 months. At the end of every month you look back over the previous 12 and add them up, so a strong run of trade can push you over even if a quieter spell later would have averaged it out.
There is a second way to trip the threshold, and it works on the future rather than the past. If at any point you expect your taxable turnover to go over £90,000 in the next 30 days on its own, you have to register straight away, from the date you realise it. That tends to bite when a single large order or contract lands. You do not get to wait and see; the expectation is enough.
Miss the point where you cross the line and you can end up owing HMRC the VAT you should have charged but did not, which comes out of your own pocket. It is worth tracking your rolling total as you approach the figure rather than checking once a year.
What counts as taxable turnover
Taxable turnover is not the same as profit, and it is not quite the same as total sales either. It is the value of everything you sell that is within the UK VAT system, before any VAT is added. Crucially that includes your zero-rated sales as well as your standard and reduced-rated ones.
Zero-rated means VAT applies at 0%, on things like most food, books and children's clothes. It still counts as taxable, just taxed at nothing, so it goes towards the £90,000. That surprises businesses who assume a 0% rate means it does not count. What genuinely sits outside the total is VAT-exempt sales, such as some insurance, finance and certain education and health services, and anything that is outside the scope of UK VAT altogether. Those are left out of the threshold sum.
Compulsory vs voluntary
Above £90,000, registering is compulsory. Below it, you have a choice, and it is a real decision rather than an obvious yes. Whether voluntary registration helps or hurts comes down mainly to who your customers are.
If you sell mostly to other VAT-registered businesses, registering tends to help. They reclaim the VAT you charge them, so it costs them nothing in practice, and meanwhile you get to reclaim the input VAT on your own costs, the VAT you pay your suppliers, equipment hire and so on. For a business buying a lot of VAT-able supplies, that reclaim can be worth real money.
If you sell to the public, it usually hurts. Your customers cannot reclaim VAT, so adding 20% either makes you a fifth dearer than an unregistered rival or forces you to swallow it and lose a chunk of margin. This is the heart of the common complaint that being VAT registered is killing the business: a sole trader who crosses the threshold can suddenly face charging 20% more to customers who will not pay it, while taking on quarterly returns. The honest answer is that VAT is not free admin or a free price rise, so for a consumer-facing business below the threshold, staying unregistered is often the sensible call. Our VAT calculator shows exactly what adding or removing 20% does to a price, which makes the trade-off concrete.
What changes once you register
Registration changes how money moves through the business in three ways. First, you charge VAT on your sales at the right rate, usually 20%, and show it on your invoices. That money is not yours; you are collecting it for HMRC.
Second, you file VAT returns, normally once a quarter, through Making Tax Digital compatible software, and pay over the VAT you have collected minus the VAT you are reclaiming. Third, you reclaim input VAT on most of your business costs, which is the upside that partly offsets the rest. The net effect is that VAT becomes a flow you manage rather than a cost you bear, but it is real work, and the cashflow timing matters because you hold customers' VAT until the return is due.
VAT is separate from the tax on your profits. A limited company still pays corporation tax on its profit regardless of its VAT position, and the two are worked out independently. If you want the mechanics of charging and reclaiming in more detail, our guide on how VAT works walks through it.
Coming off the register
Registration is not a one-way door. If your taxable turnover drops and you expect it to stay below £88,000 over the next 12 months, you can ask HMRC to cancel your registration. The deregistration figure sits just under the £90,000 entry point on purpose, so a business hovering near the line is not forced on and off the register every time turnover wobbles by a few pounds.
You must cancel, rather than simply may, if you stop trading or stop making taxable sales altogether, for example if you close the business or move entirely to VAT-exempt work. Deregistering means you stop charging VAT and stop filing returns, though there can be a final VAT bill on stock and assets you still hold, so it is worth checking the detail before you do it.
Common questions
- When do I have to register for VAT?
- You must register once your VAT-taxable turnover goes over £90,000 in any rolling 12-month period, not a tax year or calendar year. You also have to register if you expect to go over £90,000 in the next 30 days on their own, for example after winning a large contract. Registration is then compulsory whether you want it or not.
- What is the VAT registration threshold?
- The UK VAT registration threshold is £90,000 of taxable turnover. It is measured as a rolling figure: at the end of every month you add up the previous 12 months, so a busy spring can tip you over even if the calendar year as a whole would not. The threshold has been £90,000 since 1 April 2024.
- Should I register for VAT voluntarily?
- It can help if your customers are mostly VAT-registered businesses, because they reclaim the VAT you charge and you get to reclaim the VAT on your own costs. It tends to hurt if you sell to the public, who cannot reclaim it, so adding 20% either makes you dearer or eats your margin. There is also the admin of returns to weigh up.
- What happens after I register for VAT?
- You charge VAT on what you sell at the right rate, usually 20%, so your prices effectively rise unless you absorb it. You file VAT returns to HMRC, normally every quarter through Making Tax Digital software, and pay over the VAT you have collected. In return you can reclaim the VAT you pay on most business costs, called input VAT.
- Does the threshold include zero-rated sales?
- Yes. Taxable turnover includes everything you sell at the standard, reduced or zero rate, so zero-rated sales like most food or children's clothes still count towards the £90,000. What it leaves out is VAT-exempt sales, such as some insurance and financial services, and anything outside the scope of UK VAT.
- Can I deregister if turnover drops?
- Yes. If your taxable turnover falls below £88,000 you can ask HMRC to cancel your registration, and you must cancel if you stop trading or stop making taxable sales. The deregistration threshold sits just below the registration one so you do not bounce on and off the register over a small dip.
About this article
Written by the calcd team. We build UK money calculators and explain the numbers behind them in plain English. We checked the threshold and rules in this article against gov.uk (HMRC), the primary source for VAT registration, and the rates against gov.uk (HMRC). The £90,000 registration threshold and £88,000 deregistration threshold are current as at June 2026. The figures here are general information to help you plan, not financial or tax advice; VAT has many special schemes and edge cases we cannot cover here. Confirm your own position with HMRC or an accountant before you act. Last updated June 2026.