The VAT registration threshold is the level of taxable turnover above which a business must register for VAT. It is £90,000, measured over any rolling 12-month period.
The two tests
You must register if either of these applies:
- your taxable turnover for the last 12 months went over £90,000. Check at the end of every month, looking back 12 months, not just at your year end;
- you expect your taxable turnover to go over £90,000 in the next 30 days alone.
Under the first test you must tell HMRC within 30 days of the end of the month in which you went over, and you are registered from the first day of the second month after that.
What counts as taxable turnover
Everything you sell that is not exempt or outside the scope of VAT. That includes zero-rated sales.
Below the threshold
You can register voluntarily, which lets you reclaim VAT on your costs. Once registered, you can ask to deregister if your taxable turnover falls below £88,000.
Heads up — registering late does not avoid the VAT. HMRC charges it from the date you should have registered, plus a penalty.
Read more: Getting started with VAT and VAT.