You must register for VAT when your taxable turnover exceeds £90,000 in any rolling 12-month period. You have 30 days to register once you cross this threshold. You can also register voluntarily before reaching this amount.

What Is the VAT Threshold?

The VAT registration threshold is currently £90,000. This is not measured by tax year — it applies to any rolling 12-month period. For example, if your invoices from March 2024 to February 2025 total more than £90,000, you have crossed the threshold even though this spans two tax years.

How Do I Monitor My Turnover?

HMRC charges a penalty for late VAT registration. The penalty is calculated as a percentage of the VAT you should have collected from the date you crossed the threshold. The longer you delay, the higher the penalty — which is why monitoring your turnover monthly is so important.

Should I Register Voluntarily Before £90,000?

Some businesses benefit from registering for VAT before reaching the threshold. If your clients are VAT-registered businesses themselves, they can reclaim the VAT you charge — so it does not affect them. And you gain the ability to reclaim VAT on your own purchases. However, if you sell directly to consumers, adding 20% VAT to your prices can make you less competitive. Speak to an accountant before deciding.

Frequently Asked Questions

Does the VAT threshold apply to profit or turnover? It applies to turnover — the total value of your sales invoices, not your profit after costs. Does the threshold differ for sole traders and limited companies? No. The same £90,000 threshold applies regardless of your business structure. What do I do once I am registered? You must charge VAT on your invoices, submit quarterly VAT returns, and keep digital records under Making Tax Digital.

Not Sure Where You Stand?

If you are approaching the VAT threshold or are unsure whether you need to register, Fyskal can help. Book a free 15-minute call and we will tell you exactly where you stand.