- You must register for VAT once taxable turnover passes £90,000 in any rolling year
- The threshold runs on a rolling 12 months, not your tax year or accounts year
- Cross it and you owe VAT from your effective date, whether or not you charged it
The UK VAT threshold is £90,000, and you have to register for VAT once your taxable turnover goes over it in any rolling twelve-month period, or as soon as you expect to go over it in the next 30 days on its own. The rolling test isn’t tied to your tax year or your accounting year.
It’s any consecutive twelve months. Taxable turnover means everything you sell that isn’t exempt, which includes your zero-rated sales. Once you cross, you’ve got 30 days from the end of that month to register, and VAT is due from your effective date whether or not you charged it to customers.
If you’d rather not watch this yourself, Sleek’s VAT return service can register you and handle the filing.
Not sure if you’ve already gone over the threshold?
When do you have to register for VAT?
You have to register once your taxable turnover passes the VAT registration threshold, which is £90,000 for 2026. Two separate tests can trigger it, and you only need to fail one.
The backward-looking test looks at your turnover over the last twelve months. The forward-looking test looks at what you expect in the next 30 days. A common question is whether you need to register for VAT while you’re still under £90,000. You don’t have to, but you can choose to, which we cover below under voluntary registration.
What counts as taxable turnover?
Taxable turnover is the value of everything you sell that isn’t VAT exempt or outside the scope of VAT. It’s based on your sales, not your profit, so your costs don’t come into it. The part that catches people out is zero-rated sales: they’re taxed at 0%, but they still count toward the threshold.
Here’s what does and doesn’t count.
| Type of sale | VAT rate | Counts toward the threshold? |
|---|---|---|
| Standard-rated (most goods and services) | 20% | Yes |
| Reduced-rated (for example domestic fuel) | 5% | Yes |
| Zero-rated (for example most food, children’s clothes, books) | 0% | Yes |
| Exempt (for example insurance, some finance, some education) | No VAT | No |
| Out of scope (for example some grants, wages) | No VAT | No |
If most of what you sell is exempt or out of scope, you may never reach the threshold on paper even with high sales. If you’re not sure which of your sales are taxable, our guide on when not to charge VAT walks through the categories.
How does the rolling 12-month test work?
The backward test is a rolling calculation, so it doesn’t reset at year end. At the end of every month you add up your taxable turnover for the previous twelve months and check it against £90,000. Miss a month and you can cross without noticing.
Say you invoice around £7,800 a month. For most of the year your rolling twelve-month total sits comfortably under £90,000. Then a couple of larger jobs land in August 2026, and your total for the twelve months to 31 August comes to £91,500.
That’s the month that counts. You have until 30 September 2026 to register, and your effective date of registration is 1 October 2026. From that date you charge VAT on your taxable sales, even though your VAT number may take a little longer to arrive.
What is the 30-day forward-look test?
The forward test works the other way round. If at any point you have good reason to expect your taxable turnover to go over £90,000 in the next 30 days on its own, you have to register straight away. You don’t wait to see it happen.
Say you normally turn over about £4,000 a month, then in October you sign a one-off contract worth £95,000 to be delivered that month. You’ve now got reasonable grounds to expect you’ll pass £90,000 in the next 30 days, so you must register by the end of that 30-day period. Your effective date is the day you realised, not the day the money lands.
This is the test that trips up businesses winning their first big contract. Their history is well under the threshold, so they assume they’re safe.
How do you keep track of where you are?
This is the part most guides skip, and it’s the part that saves you. The threshold isn’t an annual target you glance at in the spring. It’s a number you check every month, because the month you cross is the month your clock starts.
A few habits keep you ahead of it:
- Add up your rolling twelve-month taxable turnover at the end of every month, not just at year end.
- Keep your bookkeeping current so the figure is real, not a guess.
- Flag any large one-off order early and run the forward test on it before you commit.
- Set yourself a warning line a bit below £90,000, so approaching the VAT threshold for your small business is never a surprise.
Good software or an accountant watching the number for you turns this from a worry into a routine check.
Would you rather know before you cross than after?
What happens when you cross the threshold?
Once the backward test is met, you have 30 days from the end of that month to tell HMRC. Register late and the deadline doesn’t move, it just starts costing you. You can see the full process in our guide on how to register for VAT.
Your effective date is the first day of the second month after you went over. VAT is due on your taxable sales from that date whether or not you added it to your invoices, so anything you sold without charging VAT comes out of your own margin. Registration itself is free, though there’s admin involved, which we’ve covered separately in what VAT registration costs. From your first return you’ll also file digitally under Making Tax Digital.
Do marketplace sales count gross or after fees?
If you sell through a marketplace, this is where the threshold sneaks up on you. Your taxable turnover is the full value of your sales, before the platform takes its cut. The fees are a business cost, not a reduction in your turnover.
That matters because most sellers judge their size by what lands in the bank. If a marketplace pays you £75,000 after deducting fees, your gross sales might already be well over £90,000. You’ve crossed, even though your payouts say you haven’t. Sellers who want this watched properly tend to work with accountants who specialise in online sellers, because reconciling gross sales against net payouts by hand is where mistakes creep in.
Should you register for VAT voluntarily?
You can register before you hit the threshold, and for some businesses it pays off. It makes sense when most of your customers are VAT-registered themselves, because they reclaim the VAT you charge, so your prices don’t really go up for them. It also lets you reclaim VAT on your own purchases, which helps if you’ve bought a lot of stock or equipment.
It’s less appealing when you sell mainly to the public, who can’t reclaim VAT, so adding 20% either eats your margin or raises your price. There’s also the extra admin. If you do register, the next decision is which scheme suits you, and our guide on choosing a VAT scheme lays out the options.
What happens if you come back under the threshold?
If your taxable turnover drops and you expect it to stay below the deregistration threshold of £88,000 over the next twelve months, you can ask HMRC to cancel your registration. It sits £2,000 below the registration threshold so businesses hovering around the line aren’t forced in and out every year.
Deregistration isn’t automatic. You apply, and you keep charging and filing VAT until HMRC confirms the date. There are a few timing points worth getting right, which we cover in our guide to deregistering for VAT.
What happens if you register late?
Late registration is more expensive than most people fear, but it’s fixable. You still owe the VAT you should have charged, backdated to your effective date, and if you didn’t add it to your invoices at the time you pay it out of your own pocket.
On top of that, HMRC can charge a failure-to-notify penalty, worked out as a percentage of the VAT you should have paid and scaled by how late you were. The good news is that the penalty drops the sooner you put your hand up, and it’s lower for an honest oversight than for a deliberate one. If you think you’ve already gone over, telling HMRC early is almost always the cheaper move. The HMRC guidance sets out how the penalty is calculated.
How Sleek helps with the VAT threshold
Crossing the VAT threshold is a sign your business is growing, and it shouldn’t come with a backdated bill you didn’t see coming. Sleek pairs qualified UK accountants with technology that watches your rolling twelve-month turnover, so you’re told before you cross, not after. Our accounting service covers the registration, the scheme choice, and your ongoing returns, and you get a same-day answer when you ask a question. The AI does the legwork, a real accountant checks it, and you can see exactly what was done.
Want Sleek to handle your registration and first return?
FAQs on vat threshold
What should I do if I've already gone over without realising?
Register as soon as you spot it and tell HMRC straight away. You’ll owe VAT back to your effective date, but disclosing it yourself, before HMRC finds it, gives you the lowest penalty position. Pulling your last twelve months of sales together is the first step, and an accountant can handle the disclosure so it’s done properly.
Do I have to charge VAT on sales made before my VAT number arrives?
Yes, if those sales fall on or after your effective date. Your VAT number can take a couple of weeks to come through, but your liability starts on the effective date, not the day the number lands. The usual fix is to tell affected customers you’ll follow up with a VAT invoice once you’re registered, so you can recover the VAT rather than absorbing it.
Can I stay under the VAT threshold by turning work away?
You can decline work to keep your turnover down, and some businesses do. What you can’t do is artificially split one business into two to dodge the threshold, as HMRC can treat connected businesses as a single one. If you’re regularly turning away good work purely to avoid registering, it’s worth checking whether voluntary registration would actually leave you better off.
How long does VAT registration take?
HMRC usually issues your VAT number within about 10 to 30 working days, though busy periods can push it out. You’re liable from your effective date the whole time, so start keeping VAT records and planning your pricing straight away rather than waiting for the number. You can find more answers in our VAT, bookkeeping and accounting questions.
