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How much can I earn before VAT registration?
Short answer
The UK VAT registration threshold is £90,000 of taxable turnover, according to GOV.UK (checked 18 October 2026). You must register if your taxable turnover over the last 12 months goes above £90,000, or you expect it to go above £90,000 in the next 30 days alone. You can ask to deregister if it falls below £88,000.
The two tests
| Test | What to check | When you must register |
|---|---|---|
| Looking back | Taxable turnover in the last 12 months, on a rolling basis | Within 30 days of the end of the month you went over £90,000 |
| Looking forward | Taxable turnover you expect in the next 30 days on its own | Within those 30 days, by the end of the period |
The look back test uses any rolling 12 months, not your tax year or accounting year. Check it at the end of every month.
What counts as taxable turnover
Taxable turnover is the total value of everything you sell that is not VAT exempt, including zero rated items such as most food and children's clothes. It is your sales, not your profit. So a builder who invoices £95,000 in a year but makes £30,000 profit is over the threshold.
It does not include VAT exempt sales, such as most insurance, some education and certain health services. Selling a business asset, such as a van, normally does count.
A worked example
A self employed electrician records her monthly sales:
- November 2025 to September 2026 (11 months): £82,000
- October 2026: £9,500
On 31 October 2026 her last 12 months total £91,500, which is over £90,000. She must register by 30 November 2026, and HMRC will normally register her from 1 December 2026. From then on she must charge VAT on her invoices. If she had not been tracking monthly, she might have missed it and owed VAT she never charged.
What changes when you register
- You add 20% VAT to most invoices, or a lower rate where it applies.
- You can reclaim VAT on business purchases, such as tools, materials and software.
- You file VAT returns, usually every quarter, using Making Tax Digital compatible software.
- Your prices to the public go up unless you absorb the VAT, which matters most if your customers are homeowners who cannot reclaim it.
Voluntary registration
You can register below £90,000. It can make sense if most of your customers are VAT registered businesses, because they reclaim the VAT you charge, and you get to reclaim VAT on your costs. It usually makes less sense if you sell to the public.
Can AI help with VAT?
Yes, in the bookkeeping. Accounting software with AI features can track your rolling 12 month turnover, warn you as you approach the threshold and read receipts. Chatbots can explain the rules in plain English. But do not rely on a chatbot to decide whether you must register, especially near the line or with exempt or mixed sales. Check GOV.UK or ask an accountant. See can AI do my VAT return? and do AI subscriptions charge UK VAT?
Common mistakes
- Checking turnover by tax year instead of every rolling 12 months.
- Using profit instead of sales.
- Forgetting the 30 day forward look test when a big contract lands.
- Registering late, then having to pay VAT out of your own pocket on sales where you did not charge it, plus possible penalties.
Related questions
Is the VAT threshold £85,000 or £90,000?
£90,000. It rose from £85,000 on 1 April 2024. Older guides still quote the old figure.
Can VAT registration be backdated?
Yes. If you registered late, HMRC will register you from the date you should have registered, and you owe VAT from then. Voluntary registrations can sometimes be backdated so you can reclaim VAT on earlier costs, within HMRC's time limits.
Does the threshold apply to sole traders and limited companies?
Yes, the same £90,000 threshold applies to both. For a sole trader, it covers all your business activities together.
When can I deregister?
You can ask HMRC to cancel your registration if your taxable turnover falls below £88,000. You must cancel if you stop trading or stop making taxable supplies.
Sources
- GOV.UK: register for VAT
- GOV.UK: cancel your VAT registration
- GOV.UK: VAT notice 700/1, should I be registered for VAT?
- GOV.UK: how VAT works, VAT thresholds
Checked 18 October 2026. Rules and prices change, so check the source before you rely on it. This is general information, not legal, tax or financial advice.
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