UK VAT registration threshold and how to register

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The UK VAT registration threshold is £90,000 of taxable turnover. A business must register when taxable turnover for the last 12 months exceeds £90,000, or when it expects more than £90,000 of taxable sales in the next 30 days.

Most businesses register online through HMRC, although some cases require a postal VAT1 form. The date that triggers registration matters because VAT can become due on earlier sales if the business applies late.

Measure or step	Rule
VAT registration threshold	£90,000 taxable turnover
12-month turnover check	Review taxable supplies at each month close for a period of up to the preceding 12 months
Forecast test	Register if expected taxable sales exceed £90,000 in the next 30 days
12-month test application deadline	Within 30 days after the end of the month when turnover exceeded £90,000
12-month test effective date of registration	Day one in month two following the month turnover crossed £90,000
Deregistration level	£88,000
Standard VAT rate	20 per cent for most goods and services

What counts towards the threshold

Taxable turnover is the value of sales that are neither VAT exempt nor outside VAT. It includes standard-rated, reduced-rated and zero-rated supplies.

HMRC includes taxable supplies in the UK and Isle of Man when calculating the figure. That includes zero-rated items, despite their 0 per cent VAT rate.

Some sales do not enter the calculation. Examples include insurance, betting and gambling, providing credit, and certain education and training.

A business selling zero-rated goods may reach the £90,000 threshold, while exempt sales are excluded from taxable turnover.

Most goods and services carry VAT at 20 per cent. Zero-rated examples include most food other than restaurant meals and hot takeaway food, books, newspapers, and young children’s clothing and shoes.

When registration becomes compulsory

At the end of every month, add that month’s taxable sales to those of the previous 11 months.

If that figure exceeds £90,000, apply within 30 days of that month end. The effective date of registration falls on day one of the month following the next month.

The second test is forward-looking. It applies at any point when the business expects taxable sales in the next 30 days alone to exceed £90,000.

The application deadline is the final day of that 30-day period. Registration takes effect from the date the business realised its expected sales would exceed the threshold.

A 12-month turnover example

Suppose a business checks its sales at the end of a month. Its taxable sales for that month are £9,000, and its taxable sales for the preceding 11 months are £82,000.

The calculation is £9,000 plus £82,000, which equals £91,000. Because £91,000 exceeds £90,000, the 12-month test has been met.

The business has 30 days from that month end to register. Registration starts on day one in month two following the month checked.

A separate example shows the forecast test. If expected taxable sales over the next 30 days are £95,000, the business must register even if its previous 12 months were below £90,000.

Exceptions, exemptions and overseas businesses

A business can seek a registration exception when its turnover crosses £90,000 only temporarily. It must show HMRC that taxable supplies will stay at or below £88,000 during the following 12 months.

If HMRC grants the exception, it writes to confirm it. Where it does not grant the exception, HMRC registers the business.

A registration exception must be sent by post using VAT1. It is different from an exemption from registration.

Where most taxable supplies are zero-rated, a business may seek an exemption from registration. HMRC permission is needed, and a business with that exemption cannot reclaim input tax on its purchases.

Businesses established outside the UK must register whatever their turnover if they make supplies into the UK. The same rule applies if they expect to make such a supply within 30 days.

How to register

Registration is usually completed through the register for VAT online service. A user can create sign-in details there if needed, and save an unfinished application to return to later.

For a limited company, the application requires its company registration number, bank account information, Unique Taxpayer Reference (UTR), and annual turnover information.

The application includes estimated taxable turnover for the 12 months beginning on the registration date. The previous 12 months may be used as the basis for that estimate.

The Agricultural Flat Rate Scheme requires a postal VAT1 application. A local authority, parish or district council, and an insolvency practitioner registering a business, must also use VAT1 by post.

An agent can submit an application through the agent portal. The business remains responsible for the accuracy of information sent to HMRC.

After registration, HMRC issues a nine-digit VAT registration number. That number must appear on every invoice the business raises.

HMRC also confirms the effective date of registration and tells the business when its first VAT return and payment are due.

Making Tax Digital for VAT requires compatible software for filing VAT returns.

Invoices while registration is pending

A business cannot show VAT on invoices until it receives its VAT registration number. It can increase prices to cover VAT that will become due.

For example, where the agreed price is £1,000, adding 20 per cent produces an invoice total of £1,200 under how VAT is worked out on a price. The VAT amount is £1,000 multiplied by 0.2, which is £200.

Once the VAT number arrives, the invoice can be reissued showing the full amount and the VAT. A VAT-registered business customer buying for business use can treat that VAT as input tax on its next VAT return, while the total paid stays unchanged.

Late registration and voluntary registration

VAT is due on sales from the date when the business should have registered, even if customers were never charged VAT.

A penalty may apply, depending on the amount owed and how late the registration was.

Businesses below £90,000 can choose voluntary registration. HMRC says one reason is recovering VAT incurred on taxable supplies.

Where a VAT-registered business customer buys goods or services for business use, VAT charged by the seller is the customer’s input tax.

Common questions

Does zero-rated turnover count towards VAT registration?

Yes. Zero-rated supplies are taxable supplies, so they count towards the £90,000 threshold.

Can a business leave VAT registration when sales fall?

When taxable turnover is below £88,000, a registered business can ask HMRC to cancel its registration. That route does not apply to a business based outside the UK which supplies the UK.

Can a business register before reaching £90,000?

Yes. A business below the threshold can make a voluntary registration application.

What happens after HMRC accepts registration?

HMRC provides a nine-digit VAT registration number, confirms the effective date, and sets the first return and payment due dates.

Sources

• GOV.UK: Register for VAT: When to register for VAT
• GOV.UK: Who should register for VAT - VAT Notice 700/1
• GOV.UK: Register for VAT: How to register for VAT
• GOV.UK: Register for VAT: Cancel your VAT registration
• GOV.UK: VAT Notice 700/1: supplement
• GOV.UK: VAT guide (VAT Notice 700)