When you have to register for VAT, and when it might pay to
Most people know the threshold. Fewer know that it is tested on a rolling basis, which is what catches businesses out, because you can cross it in a month that has nothing to do with your year end.
A UK business must register for VAT when its taxable turnover exceeds £90,000 in any rolling 12-month period, or when it expects to exceed £90,000 in the next 30 days alone. Registration is also available voluntarily below that threshold.
Figures are for the 2026/27 tax year. Last checked against gov.uk on 23 August 2026. The sources are on our tax dates and rates page.
How the test actually works
You must register when your total taxable turnover for the last 12 months goes over £90,000. That is any rolling 12-month period, not your accounting year, so it has to be watched continuously.
There is a second, separate test. If you expect your taxable turnover to exceed £90,000 in the next 30 days on its own, you must register immediately. One large contract can trigger it.
Once you cross the threshold you have 30 days from the end of that month to register, and your effective registration date is the first day of the second month after you went over. Miss it and you may owe VAT on sales you never charged VAT on, out of your own margin.
Registering voluntarily
You can register below the threshold, and for some businesses it is the right call.
- If your customers are VAT-registered businesses, they reclaim the VAT you charge, so registering costs them nothing and lets you reclaim VAT on your own purchases.
- If you have significant VAT on costs, equipment or stock, registering can put real money back.
- If you sell mainly to consumers, registering effectively raises your prices by up to 20% or cuts your margin, which is usually a reason not to.
- Registration brings quarterly returns, digital record keeping and Making Tax Digital obligations, so it is not free in time.
The schemes worth knowing about
| Scheme | What it does | Worth checking if |
|---|---|---|
| Flat Rate Scheme | Pay a fixed percentage of gross turnover instead of accounting for VAT on every sale and purchase | You have low VAT on purchases. Check the limited cost business rules first, as they apply a higher rate and remove most of the benefit |
| Cash Accounting | Account for VAT when you are actually paid rather than when you invoice | Your customers pay slowly, or you have bad debts |
| Annual Accounting | One return a year with instalments through the year | You want fewer filings and more predictable payments |
Questions people ask about this
What is the VAT registration threshold?
The threshold is £90,000 of taxable turnover. It is tested on a rolling 12-month basis rather than against your accounting year, so it needs watching continuously rather than checking once a year.
How long do I have to register once I go over the threshold?
You must register within 30 days of the end of the month in which you went over. Your effective date of registration is the first day of the second month after you exceeded it. Registering late can leave you owing VAT on sales where you never charged it.
Can I register for VAT voluntarily?
Yes. It often makes sense if your customers are VAT-registered businesses who can reclaim the VAT, or if you carry significant VAT on your own costs. It usually makes less sense if you sell mainly to consumers, because it either raises your prices or cuts your margin.
Does the 30-day forward test apply separately?
Yes. If you expect taxable turnover to exceed £90,000 in the next 30 days on its own, you must register straight away, regardless of what the rolling 12-month figure says. A single large contract can trigger this.
Should I use the VAT Flat Rate Scheme?
It depends on how much VAT you incur on purchases. Check the limited cost business rules first: many service businesses fall within them, which applies a higher flat rate and removes most of the benefit. Work out both positions on your own figures before choosing.
This guide is general information about how the rules work, not advice for your circumstances, and it does not cover every rule or exception. The right answer depends on your own figures. Speak to us, or another qualified adviser, before deciding.
Want this worked out on your actual numbers?
We will run the comparison on your figures and tell you plainly which way it falls, including when the answer is to leave things as they are. The first consultation is free.
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