UK VAT guide
UK VAT Registration Threshold Guide
A practical explanation of the two standard turnover tests, the dates they produce and what to do when taxable turnover goes over £90,000.
The two tests
VAT registration threshold at a glance
At every month-end, total the previous 12 months of taxable turnover. Register if it is over £90,000.
Register if you expect taxable turnover over £90,000 in one 30-day period by itself.
These are separate tests. A business can meet the forward test even when its turnover for the previous 12 months is well below the threshold.
Looking backwards
The rolling 12-month test
Check taxable turnover at the end of every calendar month. Add the latest completed month and remove the oldest, so the period keeps moving. If the business has traded for less than 12 months, use the whole trading period so far.
- Total taxable turnover
Use the previous 12 months ending on the latest month-end, across all activities carried on by the same legal person.
- Compare it with £90,000
The duty normally arises at the first month-end when the total goes over the threshold. A later fall does not erase it.
- Keep the first crossing date
It determines the usual application deadline and effective registration date.
Worked example
Threshold first exceeded at 31 August
A UK-established business has £100,000 of taxable turnover for the 12 months ending 31 August. It normally applies by 30 September and becomes registered from 1 October.
Looking forwards
The forward 30-day test
This test applies as soon as there are reasonable grounds to expect more than £90,000 of taxable supplies in the next 30 days alone. It is not an annualised forecast, monthly average or forecast for the next 12 months.
The key date is when the expectation first arose, which could be when a firm order or contract was agreed. Registration normally starts on that date rather than when the customer later pays or the running total crosses the threshold.
HMRC-style example
A £100,000 contract is agreed on 1 May
If the taxable supply is expected within the next 30 days, the business normally applies by 30 May and becomes registered from 1 May.
Use the right figure
What counts as taxable turnover
Use the value of taxable supplies excluding VAT. Combine the activities carried on by the same person or legal entity; costs do not reduce turnover for this test.
Normally include
- Standard-rated sales
- Reduced-rated sales
- Zero-rated sales
- Relevant reverse-charge and deemed supplies
Normally exclude
- Exempt supplies
- Outside-the-scope supplies
- Ordinary sales of business capital assets
- Business costs and expenses
Special cases can change the treatment, including opted-to-tax property, some reverse-charge transactions and business transfers. Check HMRC guidance if the classification is uncertain.
Do not mix these up
Deadlines and registration dates
The application deadline and the effective date of registration are different. VAT can be due from the effective date even if the VAT number arrives later.
| Test | Application deadline | Registration normally starts |
|---|---|---|
| Rolling 12-month test | Within 30 days after the threshold month ends | First day of the second month after that month-end |
| Forward 30-day test | By the end of the inclusive 30-day period | The date the expectation first arose |
If both tests appear to apply, keep both sets of dates and ask HMRC to confirm the correct effective date. Do not choose the later date.
When the standard answer is not enough
Exceptions, voluntary registration and special cases
Temporary increase in turnover
If the rolling test is exceeded because of a temporary increase, a UK-established business may ask HMRC for an exception. It must show that taxable turnover will not go over £88,000 in the next 12 months. The exception is not automatic, and it does not remove a forward-test duty.
Voluntary registration
A genuine business can apply below the compulsory threshold. From its chosen registration date it must account for VAT and submit the required returns, including nil returns when applicable.
Cases needing separate guidance
The standard £90,000 threshold does not apply to a non-established taxable person making UK taxable supplies. Separate rules can also affect business transfers, artificial separation, Northern Ireland transactions, mainly zero-rated businesses and historic threshold crossings.
If a possible crossing happened before 1 April 2024, use HMRC’s historical thresholds. A past registration duty does not disappear because turnover later falls.
Put the rules into practice
Check your VAT registration position
Enter your figures to compare both standard tests, see the dates they produce and identify cases that need HMRC guidance.
Common questions
Frequently asked questions
Is the VAT registration threshold £90,000 or more?
The standard test is triggered when taxable turnover goes over £90,000. Exactly £90,000 does not trigger either standard turnover test, although voluntary registration may still be possible.
Is the VAT threshold based on profit?
No. It is based on taxable turnover before deducting business costs. A business with £95,000 of taxable sales and £60,000 of costs still has £95,000 of taxable turnover for this test.
Does the rolling 12-month test reset each tax year?
No. Check at the end of every calendar month using the previous 12 months, or the whole trading period if the business is newer. It is not tied to a tax year, accounting year or calendar year.
Do zero-rated sales count towards the VAT threshold?
Yes. Standard-rated, reduced-rated and zero-rated supplies are taxable supplies and normally count. Exempt and outside-the-scope supplies normally do not count.
Can a temporary increase be ignored?
Not automatically. A UK-established business that exceeds the backward-looking test may ask HMRC for an exception if it can show that taxable turnover will not go over £88,000 in the next 12 months. HMRC must approve the exception, and it does not remove a separate forward-test duty.
Can a business register voluntarily below the threshold?
Yes. A genuine business making or intending to make taxable supplies can apply voluntarily. From the chosen registration date it must account for VAT and submit VAT returns, including nil returns when required.