VAT Registration: When You Must Register, and When You Should Not
Most businesses do not decide to register for VAT — they discover they should have registered some months ago. The test is not the one people assume, and getting it wrong is expensive because the VAT is owed whether or not you ever charged it.
The rolling 12-month test
You must register when VAT-taxable turnover exceeds £90,000 in any rolling 12-month period. Not your accounting year. Not the tax year. At the end of every month, look back over the previous twelve.
A business turning over £8,000 a month crosses £90,000 partway through its second year, and the month it happens has nothing to do with its year end. This is the single most common way businesses end up registered late.
The forward look
There is a second trigger. If you expect turnover to exceed £90,000 in the next 30 days alone — a single large contract will do it — you must register immediately, and the registration is effective from the date you formed that expectation, not from when the money arrives.
Deadlines
| Trigger | Register by | Effective from |
|---|---|---|
| Rolling 12 months exceeded | 30 days after the end of that month | The first day of the second month after you went over |
| Expect to exceed in 30 days | End of that 30-day period | The date you realised |
What registration actually changes
- You add 20% to your prices, or absorb it. For consumer businesses this is effectively a price rise.
- You reclaim VAT on purchases, which is why it can suit businesses that buy a lot.
- You file VAT returns, usually quarterly, through Making Tax Digital compatible software.
- Your record keeping has to be good enough to support both sides of every return.
When voluntary registration pays
You can register below the threshold. It is worth it when your customers are VAT-registered businesses that reclaim the VAT anyway, when you buy a lot of standard-rated goods and services, or when your sales are zero-rated so you reclaim input VAT without charging output VAT.
It is usually a bad idea when you sell to the public and your competitors are not registered: you become 20% more expensive overnight for no benefit.
If you are already over
Register now and tell HMRC yourself. A voluntary disclosure carries a far lower penalty than being found. Work out the VAT owed from the date registration should have started — for sales you have already made, this comes out of your own margin unless customers will accept a VAT-only invoice.
Getting help with this
AJH Accountants handles VAT and small business accounting for clients across the UK. We file the return, tell you what you can claim, and deal with HMRC on your behalf, so nothing depends on you remembering a deadline.
See how our VAT and small business accounting service works, or send us a quotation request and we will call you back. You can also call the office on 01204 840303.
Quick answers
- The threshold is £90,000 of VAT-taxable turnover in any rolling 12-month period.
- It is not measured on your tax year, which is why businesses cross it without noticing.
- You must also register if you expect to exceed £90,000 in the next 30 days alone.
- Register within 30 days of the end of the month you went over.
- Miss it and you owe the VAT on sales already made, whether or not you charged it.
- Voluntary registration can pay if your customers are VAT registered and you buy a lot.
FAQs
When do I have to register for VAT?
When your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period, or when you expect to exceed £90,000 in the next 30 days on its own. The rolling test is the one that catches people: it is checked at the end of every month, looking back over the previous twelve, not at your year end.
What happens if I go over the threshold without noticing?
You are still liable for the VAT on sales made from the date registration should have taken effect, even though you did not charge it — so it comes out of your margin. HMRC can also charge a failure to notify penalty based on the tax due and how long it went unreported. Correcting it yourself before HMRC raises it substantially reduces the penalty.
Is the Flat Rate Scheme worth it?
Sometimes. You charge the normal 20% but pay HMRC a lower flat percentage of gross turnover and generally cannot reclaim input VAT. It suits businesses with few purchases. Watch the limited cost trader rules: if your goods spending is very low, you are pushed to a 16.5% rate that removes almost all the benefit.
Can I deregister for VAT?
Yes, if your taxable turnover falls below the deregistration threshold of £88,000 and you expect it to stay there. You may have to account for VAT on stock and assets you still hold on which you reclaimed VAT. It is worth modelling before deregistering, particularly if you have recently bought equipment.
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Where this information comes from
This article was written using the following published sources, and was last reviewed on 4 September 2026:
Please read this before acting on anything above
We have taken care to get this right and believe it to be correct to the best of our knowledge at the time of writing. Even so, we cannot guarantee that everything here is completely accurate or still current, and we do not accept responsibility for any loss arising from relying on it. Tax rules change, sometimes at short notice, and pages are not always updated the same day.
This is general information, not advice about your own circumstances. Two people with the same income can owe very different amounts. Please do not make a decision on the strength of this article alone. Check the sources above, do your own research, and reach your own decision — and where money or a filing deadline turns on it, speak to a qualified accountant who knows your full position first.