VAT registration in the UK — the £90,000 threshold explained

Updated: 14/07/2026 · 7 min read

VAT registration becomes compulsory when your taxable turnover — revenue, not profit — exceeds £90,000 in any rolling 12-month period, or when you expect to pass the threshold within the next 30 days. Below the threshold, registering is optional and sometimes worthwhile. Once registered, VAT is a digital-only affair under Making Tax Digital.

The rolling 12-month test

Check your turnover for the last 12 months at the end of every month — it is not the tax year or calendar year that counts. Cross £90,000 and you normally have 30 days to register. Deregistration has a lower threshold (£88,000) to stop businesses bouncing in and out.

Voluntary registration — when it pays

Your customers are VAT-registered businesses (they reclaim your VAT, so your net price is unchanged for them)
You have significant VATable costs — materials, equipment, fuel — to reclaim input VAT on
You want to look established
Caution: with consumer customers, VAT usually means raising prices or absorbing the hit

UK VAT rates at a glance

20% standard rate — most goods and services
5% reduced rate — e.g. some energy-saving work, child car seats
0% zero rate — e.g. most food, children’s clothes, new residential construction
Exempt (insurance, education) — not the same as zero-rated

Flat Rate Scheme

Instead of reconciling VAT on every purchase, you pay HMRC a fixed industry percentage of gross turnover, while charging VAT on sales as normal. Available up to £150,000 net turnover. Often attractive with low costs — but watch the "limited cost trader" rate, which is deliberately less generous.

MTD: VAT filing is software-only

Every VAT-registered business falls under Making Tax Digital: digital records and returns filed via compatible software. Digitised purchase invoices with VAT extracted are the foundation — exactly what automated document reading gives you.

Every receipt captured, categorised and audit-ready.

Snap a photo or forward the email — Reclaim Day reads the vendor, amounts, VAT and date for you.

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Frequently asked questions

What is the VAT threshold in the UK?+

£90,000 of taxable turnover in any rolling 12-month period (since April 2024). It is turnover, not profit, that counts.

How long do I have to register after crossing it?+

Normally 30 days from the end of the month you crossed the threshold. Late registration can mean back-dated VAT plus penalties.

Is voluntary registration worth it?+

Often yes when your customers are VAT-registered businesses or you have big VATable costs to reclaim. Usually not when you sell to consumers.

Do I need software for VAT returns?+

Yes — Making Tax Digital requires digital records and filing through compatible software for all VAT-registered businesses.

This guide is general information, not tax advice. Rules and figures change — check gov.uk (HMRC) for current rates, and speak to an accountant about your situation.