VAT registration is one of those milestones that creeps up on growing businesses. Miss the deadline and HMRC can charge VAT backdated to when you should have registered — plus interest and penalties. Here's exactly what you need to know.
What is the VAT registration threshold?
The VAT registration threshold is currently £90,000. This applies to your taxable turnover — the total value of VAT-able goods and services you've supplied in any rolling 12-month period. Note that this is rolling 12 months, not a tax year: HMRC looks at any consecutive 12-month window, not just April to April.
The threshold has been at £90,000 since April 2024, when it was increased from £85,000. The deregistration threshold (the level below which you can apply to cancel your VAT registration) sits slightly lower, at £88,000.
When exactly do I have to register?
There are two situations that trigger a mandatory registration obligation:
Threshold exceeded in the past 12 months: If at the end of any calendar month your taxable turnover for the previous 12 months has exceeded £90,000, you must register. The deadline to notify HMRC is 30 days after the end of that month, and your registration will be effective from the first day of the following month.
Threshold expected to be exceeded in the next 30 days: If you have reasonable grounds to believe your taxable turnover will exceed £90,000 in the next 30 days alone (for example you've just won a big contract), you must register immediately. Your registration is effective from the start of that 30-day period.
In both cases, you can register online via your Government Gateway account at gov.uk/register-for-vat.
What counts as taxable turnover?
Taxable turnover includes supplies at the standard rate (20%), reduced rate (5%), and zero rate (0%). Zero-rated supplies — such as most food, children's clothing, and books — count towards your threshold even though no VAT is charged on them.
It does not include VAT-exempt supplies (such as financial services, insurance, or private education), or the sale of capital assets like business equipment. If you're unsure whether a particular supply is taxable, taxable at zero rate, or exempt, this matters — get specific advice for your situation.
Should I register voluntarily?
Even if your turnover is below £90,000, you can choose to register for VAT voluntarily. This makes sense if:
- Most of your customers are VAT-registered businesses who can reclaim the VAT you charge — so being VAT-registered doesn't make you more expensive to them
- You have significant VAT-able business purchases and want to reclaim the VAT on them
- You make zero-rated supplies — meaning you charge no VAT to customers but can still reclaim input VAT on your purchases
Voluntary registration is less attractive if most of your customers are consumers (not businesses), because adding 20% VAT to your prices will make you more expensive and harder to compete with non-registered rivals.
What changes when you're VAT-registered?
Once registered, you must:
- Charge VAT on your taxable supplies at the appropriate rate
- Issue VAT invoices showing your VAT number, the VAT amount, and the net and gross values
- File VAT returns — usually quarterly, though annual accounting is available if your turnover is below £1.35m
- Keep VAT records using Making Tax Digital (MTD) compatible software — this is mandatory for all VAT-registered businesses
- Pay the VAT you owe to HMRC (the VAT you've collected minus any input VAT you can reclaim)
VAT accounting schemes worth knowing about
HMRC offers several schemes that can simplify VAT for smaller businesses. The Flat Rate Scheme lets you pay a fixed percentage of your gross turnover instead of tracking every purchase — useful if you have few VAT-able expenses. It's available if your taxable turnover is under £150,000. The Cash Accounting Scheme (available under £1.35m turnover) means you only account for VAT when you actually receive or make payment, rather than on the invoice date — helpful for businesses with slow-paying clients.