The £90,000 VAT threshold, explained

What the threshold is

You must register for VAT if your VAT-taxable turnover exceeds the registration threshold of £90,000. This figure rose from £85,000 to £90,000 with effect from 01 April 2024 and has not changed since. gov.uk/vat-registration

“Taxable turnover” means the total value of everything you sell that is not exempt from VAT. It includes standard-rated, reduced-rated and zero-rated sales. It does not include VAT-exempt supplies (such as most insurance, finance, and some education and health services), and it is not the same as your profit.

Test one: the backward look (rolling 12 months)

At the end of every month, add up your taxable turnover for that month and the previous eleven. If that running 12-month total is more than £90,000, you have gone over the threshold and must register. It is a sliding window — it is not your accounting year and not the calendar year.

This is the test our tracker runs for you at each month-end, so you can see the trigger month coming rather than discovering it after the fact.

The registration timeline once you cross

• Notify HMRC within 30 days of the end of the month your rolling total went over.
• Your registration takes effect from the first day of the second month after you went over.

For example, if your rolling total crosses at the end of March, you must notify HMRC by 30 April, and you are registered from 1 May.

Test two: the forward look (next 30 days)

Separately, if at any point you expect your taxable turnover in the next 30 days alone to exceed £90,000 — for instance after signing a single large contract — you must register immediately. Registration takes effect from the date you formed that expectation, not the end of the 30 days. Most online VAT calculators ignore this trigger entirely. VAT Notice 700/1

What VAT means once you’re registered

Once registered, you charge VAT (the standard rate is 20%) on your taxable sales, can reclaim VAT on most business purchases, and must keep digital records and file quarterly returns under Making Tax Digital. Depending on your trade, the Flat Rate Scheme may simplify how much you pay.

Should you register before you have to?

You can register voluntarily even below the threshold. Whether that pays depends on your customer mix and your recoverable input VAT — see voluntary vs compulsory registration.