When You Must Register for VAT: The £90,000 Threshold Explained
Last updated 12 June 2026
You must register for VAT if your VAT taxable turnover for the last 12 months goes over £90,000, or if you expect your taxable turnover to go over £90,000 in the next 30 days alone. The 12-month figure is a rolling total — not a tax year or calendar year — so you need to re-check it at the end of every month. If you breach the backward-looking test, you must register within 30 days of the end of the month you went over. Businesses below £90,000 can register voluntarily.
- The VAT registration threshold is £90,000 of VAT taxable turnover in any rolling 12-month period (gov.uk).
- There are two separate triggers: the backward-looking 12-month test and the forward-looking 30-day test.
- 12-month test: register within 30 days of the end of the month you went over; VAT applies from the first day of the second month after you exceeded the threshold.
- 30-day test: register by the end of the 30-day period; VAT applies from the date you realised you would go over — not when the money arrives.
- Taxable turnover includes standard-rated (20%), reduced-rated (5%) and zero-rated (0%) sales — only VAT-exempt and outside-the-scope income is left out.
- Register late and you must pay VAT on every sale made since the date you should have registered, plus a possible penalty.
- The deregistration threshold is lower, at £88,000, and you can apply for an exception if you only breach £90,000 temporarily.
What is the VAT registration threshold in 2026/27?
The VAT registration threshold is £90,000 of VAT taxable turnover. Cross it and registration is compulsory — this applies to sole traders, partnerships and limited companies alike. Crucially, the test is a rolling 12-month total, measured at the end of every month, not your turnover in a tax year or accounting year. A business that never tops £90,000 in any single tax year can still breach the threshold across twelve months that straddle two years.
| VAT figure (2026/27) | Amount |
|---|---|
| Registration threshold (taxable turnover, rolling 12 months) | £90,000 |
| Deregistration threshold | £88,000 |
| Standard VAT rate (most goods and services) | 20% |
| Reduced rate (e.g. home energy, children's car seats) | 5% |
| Zero rate (e.g. most food, children's clothes) | 0% |
All figures from gov.uk, verified June 2026. Note the threshold applies only to businesses established in the UK — if you are based overseas and supply goods or services to the UK, there is no threshold at all and you must register from your first UK sale.
How does the rolling 12-month test work?
At the end of each month, add up your VAT taxable turnover for the previous 12 months. If that total exceeds £90,000, you must register within 30 days of the end of the month in which you went over. Your registration takes effect from the first day of the second month after you exceeded the threshold.
Worked example. Aisha runs a kitchen-fitting business. At the end of July 2026 she totals her takings for August 2025 to July 2026 and gets £91,200 — over the threshold for the first time.
| Step | Date | What happens |
|---|---|---|
| Rolling 12-month turnover passes £90,000 | 31 July 2026 | Compulsory registration triggered |
| Deadline to register with HMRC | 30 August 2026 | 30 days from the end of July |
| Effective date of registration | 1 September 2026 | First day of the second month after going over — Aisha must charge and account for VAT from this date |
The practical lesson: if your turnover is anywhere near £7,500 a month, check the rolling total every single month. Discovering a breach six months late is expensive, because HMRC backdates your registration regardless.
What is the 30-day test?
The forward-looking test catches sudden jumps. If you expect your taxable turnover to go over £90,000 in the next 30 days alone, you must register by the end of that 30-day period — and your registration is effective from the date you first realised you would exceed it, not from when the money actually lands.
Example: on 20 June 2026 a consultant signs a single contract worth £100,000, payable within 30 days. The expectation arises on 20 June, so registration must be completed by 19 July, and VAT must be accounted for on the contract from 20 June itself. There is no "first day of the second month" grace under this test — it bites immediately.
| 12-month (backward) test | 30-day (forward) test | |
|---|---|---|
| Trigger | Rolling 12-month taxable turnover passes £90,000 | You expect taxable turnover over £90,000 in the next 30 days alone |
| Register by | 30 days after the end of the month you went over | The end of the 30-day period |
| VAT applies from | First day of the second month after going over | The date the expectation arose |
What counts as VAT taxable turnover?
Your VAT taxable turnover is the total value of everything you sell that is not exempt from VAT. It includes sales at all three VAT rates — standard 20%, reduced 5% and zero-rated 0%. The zero-rated point trips people up: a bakery or children's clothing seller can owe no VAT on its sales yet still be required to register, because zero-rated turnover counts towards the £90,000.
What you can leave out: VAT-exempt supplies (for example certain financial services and postage stamps) and income outside the scope of VAT. If most of your sales are zero-rated, you can ask HMRC for an exemption from registration rather than registering and filing nil-net returns — but that needs HMRC's agreement, not just your own judgement.
If you are a sole trader keeping an eye on the threshold, remember it is your gross business takings that count — not profit. Our sole trader tax calculator works from the same gross-takings starting point for your Income Tax and National Insurance, and the rest of our calculators cover specific trades.
What happens if you register late?
If you register late, you must pay VAT on the sales you have made since the date you should have registered — even though you never charged your customers VAT at the time. Depending on how much you owe and how late you are, HMRC may add a penalty on top. For a business with consumer customers who cannot be re-invoiced, that backdated VAT usually comes straight out of the owner's pocket: roughly a sixth of every affected sale.
Once registered, you also take on VAT's admin obligations: charging the correct rate, issuing VAT invoices, keeping digital records and filing returns (usually quarterly) through Making Tax Digital-compatible software. MTD for VAT applies to all VAT-registered businesses; it is separate from Making Tax Digital for Income Tax, which starts on 6 April 2026 for sole traders and landlords with qualifying income over £50,000 — you can check where you stand with our qualifying income checker.
Should you register for VAT voluntarily?
You can register voluntarily at any turnover level below £90,000. Whether it pays depends almost entirely on who your customers are.
Voluntary registration tends to help when:
- Your customers are mainly VAT-registered businesses — they reclaim the VAT you charge, so your effective price to them does not rise.
- You buy significant standard-rated goods or services and want to reclaim the input VAT. This pairs naturally with claiming your allowable business expenses.
- You sell mostly zero-rated goods but pay 20% VAT on supplies — you may receive regular repayments from HMRC.
- You want the credibility of a VAT number when pitching to larger clients.
It tends to hurt when:
- You sell to the general public, who cannot reclaim VAT — adding 20% makes you dearer than unregistered rivals, or squeezes your margin if you absorb it.
- You have little appetite for quarterly returns, VAT invoicing and digital record-keeping.
- Cash flow is tight: you may owe HMRC VAT on invoices your customers have not yet paid.
If you are just setting up as a sole trader, the sensible default is to stay unregistered until the numbers clearly favour it — but track your rolling turnover from day one.
Can you avoid registering if you only go over temporarily?
Yes, possibly. If your taxable turnover goes over £90,000 because of a one-off spike but you can show HMRC it will fall back below the deregistration threshold of £88,000 in the next 12 months, you can apply for an exception from registration. You must still tell HMRC within the normal deadline — an exception is something HMRC grants, not something you assume. If HMRC refuses, it will register you from the date the threshold test was met.
Already registered and shrinking? Once taxable turnover falls below £88,000 you can ask HMRC to cancel your registration (unless you are an overseas business making UK supplies, where the zero threshold keeps applying).
Is the £90,000 VAT threshold based on the tax year?
No. It is a rolling 12-month total, checked at the end of every month. Your turnover for any consecutive 12 months — say, October to September — can trigger registration even if no single tax year exceeds £90,000.
Do zero-rated sales count towards the VAT threshold?
Yes. VAT taxable turnover includes standard-rated (20%), reduced-rated (5%) and zero-rated (0%) sales. Only VAT-exempt supplies and income outside the scope of VAT are excluded. A business selling mostly zero-rated goods can apply to HMRC for exemption from registration.
What is the VAT deregistration threshold?
£88,000. If your taxable turnover falls below this, you can ask HMRC to cancel your VAT registration — unless you are based outside the UK and supply the UK, in which case registration remains compulsory regardless of turnover.
I went over £90,000 because of a one-off job — do I still have to register?
You must still notify HMRC within the deadline, but you can apply for an exception from registration if you can evidence that your taxable turnover will stay below the £88,000 deregistration threshold over the next 12 months. HMRC decides; if it refuses, you are registered from the trigger date.
Do I charge VAT from the day I apply or from my effective date?
From your effective date of registration. You cannot show VAT as a separate line on invoices until your VAT number arrives, but you still owe HMRC VAT from the effective date — so many businesses raise prices to cover it in the interim and reissue proper VAT invoices once the number comes through.
Does the £90,000 threshold apply if my business is based outside the UK?
No. Non-established businesses have no registration threshold: if you supply any goods or services to the UK (or expect to within the next 30 days), you must register for UK VAT from the first sale.
Sources: Register for VAT, How VAT works, VAT rates and Cancel your VAT registration (gov.uk), verified 12 June 2026. Estimates for information only — not regulated tax advice.