VAT Registration and the £90,000 Threshold: When and How to Register
Understanding the £90,000 VAT registration threshold
The threshold is based on taxable turnover — the total value of everything you sell that is not exempt or outside the scope of VAT — not on profit. Both standard-rated and zero-rated supplies count towards it; only genuinely exempt income, such as certain financial services, is left out.
The limit applies to you as a taxable person, not to each activity. If you run several trades as a sole trader, their combined turnover counts towards the single £90,000 limit — something that catches out many people balancing several income streams or running more than one job or trade in the UK.
When registration becomes compulsory
There are two tests, and you must register if you fail either one:
The backward-looking test: at the end of each month, total your taxable turnover for the previous 12 months. If it exceeds £90,000, you must tell HMRC within 30 days of the end of that month. Registration takes effect from the first day of the second month afterwards.
The forward-looking test: if you expect your taxable turnover to exceed £90,000 in the next 30 days alone — for example, after signing a large contract — you must register straight away, with effect from the date you realised.
How to register with HMRC
Most businesses register online through their Government Gateway account on gov.uk. Before you start, gather your business details, turnover figures, bank account details and tax references (such as your Unique Taxpayer Reference). You will confirm your business structure, the nature of your trade and your effective registration date.
HMRC usually issues your VAT registration certificate and nine-digit VAT number within a few weeks. From your effective date you must charge VAT on taxable sales, show it separately on invoices, keep digital records and file returns — normally quarterly — under Making Tax Digital for VAT.
Should you register voluntarily?
You can register even if your turnover is below £90,000. Voluntary registration lets you reclaim VAT on business purchases, which can benefit firms with high costs or those selling mainly to other VAT-registered businesses. The trade-off is extra administration and, if you sell to consumers, higher prices once you add 20% VAT. Equally, if your turnover has dropped and you expect it to stay below the £88,000 deregistration threshold, you can apply to cancel your registration.
FAQ:
What is the current VAT registration threshold in the UK?
£90,000 of taxable turnover over any rolling 12-month period. It has been frozen at this level since April 2024.
How long do I have to register after crossing the threshold?
30 days from the end of the month in which your rolling 12-month turnover exceeded £90,000. Registration then takes effect from the first day of the second month.
Can I register for VAT voluntarily?
Yes. Businesses below £90,000 can register voluntarily, which allows them to reclaim VAT on purchases but adds reporting obligations.
Does the threshold apply separately to each of my businesses?
No. As a sole trader you are a single taxable person, so turnover from all your trades is added together against one £90,000 limit.
What happens if I register late?
HMRC can charge penalties and require you to pay the VAT you should have collected from your effective date, even if you did not charge your customers.
