You must register for VAT once your taxable turnover passes £90,000 in any rolling 12-month period, or if you expect to pass it within the next 30 days alone. The figure is set by Schedule 1 of the Value Added Tax Act 1994 and rose from £85,000 to £90,000 on 1 April 2024. Treat £90,000 as the figure for 2025/26; HMRC can revise it at any Budget.
How is the rolling 12-month turnover counted?
Not the tax year or calendar year. At the end of every month you total your taxable sales for the previous 12 months. Taxable turnover means standard-rated, reduced-rated, and zero-rated sales; it excludes VAT-exempt supplies and sales of capital assets. Cross £90,000 on that running total and you have 30 days to register, with VAT due from the first day of the second month after you went over.
What is the 30-day future test?
Separate from the backward-looking test. If you expect your taxable turnover to exceed £90,000 in the next 30 days on its own, usually because of one large contract, you must register immediately. Registration takes effect from the date you became aware, not the end of the 30 days. Missing either trigger risks a failure-to-notify penalty plus the VAT you should have charged but did not.
When can you cancel a VAT registration?
When your taxable turnover for the next 12 months is expected to fall below the £88,000 deregistration threshold in Schedule 1 of the VAT Act 1994, you may apply to cancel. Businesses below £90,000 can also register voluntarily to reclaim input VAT on purchases; whether that helps depends on whether your customers are themselves VAT-registered.
Primary sources
- Value Added Tax Act 1994, Schedule 1 — legislation.gov.uk — Statutory registration and deregistration limits
- Register for VAT: when to register — gov.uk — HMRC guidance on the £90,000 threshold and 30-day test
- VAT (Increase of Registration Limits) Order 2024 (SI 2024/360) — legislation.gov.uk — Raised the threshold to £90,000 from 1 April 2024
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