How to register for VAT in the UK: the £90,000 threshold

VAT (Value Added Tax) is a tax that VAT-registered businesses add to the price of most goods and services. As your turnover grows, registration becomes compulsory. Here is what counts as taxable turnover, the threshold and deadline to register, and what changes once you are registered.

What counts as taxable turnover?

VAT taxable turnover is the total of everything you sell that is not exempt from VAT. It includes goods and services at the standard, reduced and zero rates, but not supplies that are fully exempt. It is this figure — not your profit — that is compared with the threshold.

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When must you register?

You must register if your taxable turnover over any last 12 months goes over £90,000. This is a rolling period, not a calendar or tax year: the threshold is checked every month against the previous twelve months' total. You must also register if you expect your turnover to go over £90,000 in the next 30 days alone — for example after signing a large contract.

By when, and from what date?

If your turnover has already passed the threshold, you must register within 30 days of the end of the month it happened. Your effective date of registration is the first day of the second month after you went over. If instead you know in advance you will go over in the next 30 days, you must register by the end of those 30 days, and your effective date is the day you realised.

Can you register voluntarily — or avoid it?

You can register voluntarily even below £90,000 — useful if you buy a lot from other VAT-registered businesses and want to reclaim the VAT you are charged. If you go over the threshold only temporarily and as a one-off, you can ask for an "exception": HMRC will consider it and write to confirm. And if almost all your sales are zero-rated, you can apply to be exempt from registration.

What are the VAT rates?

The standard rate is 20% and applies to most goods and services. The reduced rate of 5% applies to things like children's car seats and home energy. The zero rate of 0% covers items such as most food and children's clothes. Once registered, you must charge VAT at the correct rate for each item.

What happens after you register?

You get a VAT number, start adding VAT to your prices, usually file a return every three months and pay HMRC the difference between the VAT you charged and the VAT you paid. Records are kept digitally under Making Tax Digital. If you register late, you must pay VAT on all sales from the date you should have registered, and you may face a penalty — so it pays to watch the threshold early.