The UK VAT registration threshold is £90,000 of taxable turnover. You must register if your taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days alone. The deregistration threshold is £88,000. Both figures have applied since 1 April 2024, when they rose from £85,000 and £83,000. Taxable turnover means VAT-able sales, including zero-rated sales. It does not mean total income or profit.
The UK VAT thresholds at a glance
| Threshold | Amount |
|---|---|
| Registration (taxable turnover, rolling 12 months or next 30 days) | More than £90,000 |
| Deregistration (expected taxable turnover, next 12 months) | Less than £88,000 |
| Flat Rate Scheme: join / must leave | £150,000 or less / more than £230,000 |
| Cash and annual accounting: join / must leave | £1.35 million or less / more than £1.6 million |
| Non-established businesses | No threshold: register from the first UK taxable supply |
The registration and deregistration figures are set in Schedule 1 to the VAT Act 1994, as amended by SI 2024/307. The scheme limits are on HMRC's VAT thresholds page.
What counts as VAT taxable turnover
VAT Notice 700/1 defines taxable turnover as the total value of all taxable supplies made in the UK or Isle of Man, including zero-rated ones. In practice:
- Include sales at the standard rate (20%), the reduced rate (5%) and the zero rate (0%). A business selling only zero-rated food or children's clothing still has to count every pound;
- Exclude exempt supplies, such as most financial services, insurance and residential rents. A business making only exempt supplies cannot register at all;
- Exclude sales of capital assets, such as equipment, vehicles or buildings. The exception is land or buildings you have opted to tax, which must be included;
- Exclude income outside the scope of VAT, such as grants or compensation that is not consideration for a supply.
The test applies to the person, not the business. A sole trader running two trades adds the taxable turnover of both. Our guide to what counts as a taxable supply deals with the borderline cases.
The two registration tests
The backward-looking test. At the end of every month, add up your taxable turnover for the previous 12 months. If it is over £90,000, you must register within 30 days of the end of that month. Registration takes effect from the first day of the second month after you went over.
Illustration. Your rolling 12-month turnover first goes over £90,000 at the end of May 2026. You must register by 30 June 2026, and you are VAT-registered from 1 July 2026. Sales from that date carry VAT, whether or not you have added it to your prices.
The forward-looking test. If at any time you expect taxable turnover in the next 30 days alone to exceed £90,000, you must register by the end of that 30-day period. Registration is effective from the date you realised, not the date you actually went over. This catches a single large contract, such as a builder taking a £100,000 job invoiced in one month.
Most businesses miss the backward-looking test because they think in tax years or accounting years. The test is rolling, month by month. A business with uneven sales can cross the line in the middle of its financial year without noticing. HMRC's when to register guidance sets out both tests.
Going over temporarily, and voluntary registration
If you go over £90,000 because of a one-off, you can ask HMRC for an exception from registration. You must show that your taxable turnover in the next 12 months will not exceed the £88,000 deregistration threshold. HMRC decides. Until it agrees, assume you must register.
Businesses below £90,000 can register voluntarily. That is usually worth it where customers are VAT-registered and can reclaim the VAT, or where you make zero-rated sales and would receive regular repayments of the VAT on your costs. It usually does not make sense where customers are consumers, because a 20% charge either increases your prices or comes out of your margin.
Registering late
The registration date is fixed by the law, not by when you apply. If you register late, you owe VAT on all taxable sales from the date you should have been registered. You owe it even if you did not charge it to customers, so unless you can recover it from them, it comes out of your margin. You may be able to set input tax against it where you hold valid VAT invoices. HMRC can also charge a penalty for failing to notify. The cost of a late registration grows with every month, so if you think you may have crossed the line, check your turnover month by month now.
Deregistering below £88,000
You can apply to cancel your registration if you expect taxable turnover in the next 12 months to be below £88,000. On deregistration, you account for VAT on stock and assets you still hold on which you reclaimed VAT. You do not account for this deemed supply if the total VAT due on those goods would be £1,000 or less. If your turnover rises again, you start counting afresh against the £90,000 threshold.
For a fuller explanation of how VAT works once you are in, see our guides to what VAT is and the current UK VAT rates. If you are near the threshold, or think you may already have crossed it, our VAT registration team can check your turnover, register you from the correct date and deal with any late registration. Businesses whose turnover is falling can use our VAT deregistration service.