The VAT threshold is £90,000, and the mistake people make is thinking it resets each April. It does not.

The rolling 12 month test

At the end of every month, add up your taxable turnover for the last 12 months. Any 12 months, not the tax year, not your accounting year. Over £90,000 and you must register.

Taxable turnover is everything you sell that is not exempt or out of scope. It includes zero-rated sales, goods you have hired or loaned out, business goods you took for personal use, and things you bartered or gave away. Being “zero rated” does not mean invisible: children’s clothes count towards the threshold even though you charge 0% VAT on them.

The deadline: register within 30 days of the end of the month when you went over. GOV.UK’s example: on 15 July your 12 month turnover hits £100,000 for the first time. You register by 30 August and your effective date of registration is 1 September.

The 30 day forward test

The second trap. If you realise your turnover will pass £90,000 in the next 30 days alone, you register by the end of that 30 day period, and your registration is effective from the day you realised, not the day you crossed.

GOV.UK’s example: on 1 May you sign a £100,000 contract, paid at the end of May. Apply by 30 May. Your registration is effective from 1 May, which means VAT was due on that contract money even if you never added it to your price.

What registration actually costs

From your effective date you owe HMRC the VAT on your sales. If your invoices did not include VAT because you registered late, that VAT comes out of your margin. This is why the monthly check matters: one busy quarter can push you over, and backdated VAT on a few months of takings is a miserable surprise.

Coming back down

If your turnover later falls below £88,000 you can ask HMRC to cancel your registration. Below the threshold, you can also register voluntarily if you want to, which is a separate decision covered in its own answer.

Sources

All pages checked 20 October 2026.

• When to register for VAT: https://www.gov.uk/vat-registration/when-to-register
• Cancel your VAT registration: https://www.gov.uk/register-for-vat/cancel-your-registration

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