What the threshold really means
The key word is rolling. It is not your turnover for the tax year or your accounting year, but for any 12 months in a row. At the end of each month you look back over the last 12 months. The moment that total passes £90,000, the clock starts.
The two tests, step by step
- The backward look. At the end of each month, add up taxable turnover for the previous 12 months. If it is over £90,000, you must register within 30 days.
- The forward look. If at any point you expect turnover to exceed £90,000 in the next 30 days alone, you must register immediately.
- Leaving VAT. If your turnover falls below the £88,000 deregistration threshold, you can apply to leave.
Why registering late hurts
If you cross the threshold and do not register, HMRC still treats your later sales as VAT inclusive. You end up owing VAT you never charged your customers, plus possible penalties. Watching the rolling figure is far cheaper than catching up.
Getting close to £90,000?
The rolling test catches people out. TaxTune watches your turnover, tells you when registration is coming, and handles it at the right moment on the best scheme for you.
Never miss the moment to register
We monitor your turnover, register you on time, choose the right scheme and file your returns. Fixed monthly fee.
Frequently asked questions
What is the VAT registration threshold?
It is £90,000 of taxable turnover in any rolling 12 month period. Once you cross it, or expect to within the next 30 days, you must register for VAT.
Is the threshold based on the tax year?
No. It is a rolling 12 month figure. At the end of each month you look back at the previous 12 months, not the tax year or your accounting year.
What is the deregistration threshold?
It is £88,000. If your taxable turnover falls below this, you can apply to HMRC to cancel your VAT registration.
What counts toward the threshold?
Your taxable turnover, which is standard, reduced and zero rated sales. It excludes VAT exempt income and sales outside the scope of UK VAT.
What happens if I cross the threshold and do not register?
HMRC treats your later sales as including VAT, so you owe VAT you may not have charged, plus possible penalties. Monitoring the rolling figure avoids this.