When does my small business have to register for VAT in the UK?

Full answer

VAT registration becomes compulsory when your taxable turnover passes the GBP 90,000 threshold (2026/27). Two tests apply: the backward look (turnover in any rolling 12 months exceeds GBP 90,000) and the forward look (you expect to exceed GBP 90,000 in the next 30 days on its own). Taxable turnover means standard, reduced and zero-rated sales, but not exempt supplies or sales outside the scope of UK VAT. Worked example: a sole trader's rolling 12-month turnover to 30 April reaches GBP 88,000. In May she wins a one-off contract that will add GBP 5,000, taking the rolling total to GBP 93,000. She crosses GBP 90,000 at the end of May, so she must register by 30 June and her effective date is 1 July. From then she charges 20% VAT on standard-rated sales: a GBP 1,000 net invoice becomes GBP 1,200, of which GBP 200 is output VAT due to HMRC, less any input VAT she reclaims. Voluntary registration below GBP 90,000 can pay off if your customers are VAT-registered businesses (they reclaim the VAT you charge) and you incur input VAT on costs you could recover. It rarely helps if you sell mainly to consumers, as your prices effectively rise 20%. Use the VAT calculator to model output and input VAT and the cash impact of crossing the threshold. Note there is also a deregistration threshold (lower) if turnover falls. Always confirm current thresholds, registration deadlines and any temporary exception rules at gov.uk before you act.

Try the calculator