The current VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period. This figure has been unchanged since April 2024 and applies through the 2026/27 tax year.
Once your taxable turnover crosses this threshold, VAT registration is not optional — it is a legal requirement. Missing the deadline carries penalties calculated on the VAT that should have been collected from the date you should have registered, not from when you actually did.
The threshold is not based on the tax year, the financial year, or the calendar year. It is a rolling test — recalculated at the end of every calendar month.
At the end of each month, look back at the previous 12 months of taxable turnover. If the total exceeds £90,000 at any point:
Example:
June turnover pushes rolling 12-month total to £93,000 Notify HMRC by: 31 July Registration effective from: 1 August
There is a second trigger that catches many businesses off guard. If at any point you have reasonable grounds to believe your taxable turnover will exceed £90,000 in the next 30 days alone — for example, you have just signed a large contract — you must notify HMRC immediately.
In this case, registration takes effect from the start of that 30-day period, not the end. This is stricter than the backward-looking test and gives you no grace period.
Not all income counts towards the £90,000 threshold. Understanding what to include — and what to exclude — is critical.
Included in taxable turnover:
| Supply Type | VAT Rate | Counts Towards Threshold? |
|---|---|---|
| Standard-rated sales | 20% | ✅ Yes |
| Reduced-rated sales | 5% | ✅ Yes |
| Zero-rated sales | 0% | ✅ Yes |
Not included in taxable turnover:
| Supply Type | Example | Counts Towards Threshold? |
|---|---|---|
| Exempt supplies | Residential lettings, insurance, education | ❌ No |
| Out-of-scope supplies | Wages, dividends, outside-UK B2B services | ❌ No |
| One-off asset sales | Selling a business vehicle or equipment | ❌ No (usually) |
This is why the difference between zero-rated and exempt supplies matters so much. Zero-rated sales — such as selling children's clothing or books — count towards your registration threshold even though no VAT is charged. Exempt sales do not.
Registering late is one of the most expensive VAT mistakes a business can make. HMRC charges a penalty based on the VAT that should have been collected from the date you should have registered — not from when you actually notified them.
| How Late | Penalty |
|---|---|
| Up to 9 months late | 5% of net VAT due |
| 9 to 18 months late | 10% of net VAT due |
| More than 18 months late | 15% of net VAT due |
The minimum penalty is £50. The VAT itself — 20% on all taxable sales during the unregistered period — still has to be paid. If clients have long since settled their invoices, that liability comes out of your own pocket.
You can register for VAT voluntarily at any point — even if your turnover is well below £90,000. This can make strong financial sense in the right circumstances.
Voluntary registration makes sense when:
Voluntary registration is less suitable when:
If your turnover drops after registration, you can apply to deregister. The deregistration threshold is £88,000 — you must be able to demonstrate that your taxable turnover in the next 12 months will fall below this figure.
The £2,000 gap between registration and deregistration thresholds exists deliberately to prevent constant registering and deregistering as turnover fluctuates around the line.
Once registered, HMRC will issue a VAT registration certificate confirming your VAT number and the effective date of registration. You must then:
You can also consider whether the Flat Rate Scheme is appropriate for your business at this stage.
The registration threshold is £90,000 of taxable turnover in any rolling 12-month period, unchanged since April 2024.
HMRC will charge penalties on all VAT that should have been collected from the date you should have registered. You will also owe the VAT itself — which you will have to pay from your own funds if you did not charge it to customers at the time.
Yes. Voluntary registration is available to any UK business making taxable supplies, regardless of turnover level.
HMRC typically processes VAT registrations within 10 to 40 working days. You can request a VAT registration number urgently if you need one sooner for a specific contract.