Businesses must register for VAT once turnover passes £90,000 or is about to

Correct as at 8 November 2026.

A business must register for VAT when its taxable turnover passes £90,000, and HMRC applies two separate tests to decide when that point has arrived.

Who has to register?

Under HMRC’s registration rules, registration is compulsory if taxable turnover for the last 12 months goes over £90,000, known as the VAT threshold.

The second test looks ahead: a business must also register if it expects its taxable turnover to pass £90,000 in the next 30 days.

Taxable turnover is the total value of everything sold that is not VAT exempt or outside the scope of VAT.

It includes zero-rated, reduced-rated and standard-rated goods, goods hired or loaned to customers, and business goods used for personal reasons.

It also covers goods bartered, part-exchanged or given as gifts, and building work worth more than £100,000 that a business did for itself.

What is the deadline if turnover has already gone over?

Where the 12-month figure has passed the threshold, registration is due within 30 days of the end of the month in which that happened.

The effective date of registration, from which VAT is owed, is then the first day of the second month after the threshold was passed.

HMRC gives an example: turnover for the last 12 months reaches £100,000 on 15 July, the first time it has passed the threshold.

In that case the business must register by 30 August, and its effective date of registration is 1 September.

What if a big sale is coming?

Where a business realises turnover will pass £90,000 within the next 30 days, it must register by the end of that 30-day period.

The effective date is then the date the business realised this, not the date turnover actually crossed the line.

HMRC’s example has a £100,000 services contract arranged on 1 May, with payment due at the end of May.

The application must be in by 30 May, and the effective date of registration is 1 May.

HMRC’s notes on form VAT1 say the form must be sent within 30 days of the day the business first considered it might go over the threshold.

What does registering mean for invoices?

From the effective date of registration, a business can charge VAT on its sales and reclaim VAT on items it has bought, HMRC said.

After registering, it receives a 9-digit VAT registration number, which must appear on every invoice it raises.

VAT cannot be shown on invoices until that number arrives, though HMRC said a business can raise its prices to cover the VAT it will owe.

In the 1 May example, the business adds 20% to the £100,000 contract and invoices £120,000.

Once the number arrives, the invoice is reissued showing the full amount including £20,000 VAT, and the customer can reclaim that £20,000 on its next VAT return.

What happens if a business registers late?

A late registration means VAT must be paid on any sales made since the date the business should have registered.

HMRC said a penalty may also apply, depending on how much is owed and how late the registration is.

Who is left out, or treated differently?

A business that only sells VAT-exempt or outside-scope goods and services does not have to register.

A business whose taxable goods or services are mostly zero-rated may not need to register, but it must ask HMRC for permission, which is called an exemption from registration.

A business that goes over the threshold only temporarily can apply for a registration exception, and HMRC will write to confirm whether it has been granted.

Businesses based outside the UK are treated differently. HMRC’s guidance for non-established businesses says the threshold does not apply to them, so they must register for taxable supplies of any value in the UK.

They must tell HMRC within 30 days of making taxable sales in the UK, or of expecting to within the next 30 days.

Taking over a VAT-registered business can also trigger registration, if the combined taxable turnover of old and new businesses exceeds the threshold in force on the transfer date.

Registering voluntarily below £90,000 is also allowed. Where a business registers despite being under the threshold, it must normally stay registered for 2 clear calendar years after its registration date.

Do private schools follow the same test?

Yes. Since 1 January 2025, education and boarding services provided by private schools for a charge have carried VAT at the standard 20% rate.

Under HMRC’s rules for schools, the same £90,000 tests apply, based on the last 12 months or payments expected in the next 30 days.

In HMRC’s example, a school that had received £95,000 in fees by 31 January 2025 had to register within 30 days of the end of January and charge VAT from 1 March 2025.

How does a business register?

Most businesses can register online, and HMRC said an application can be saved and finished later.

A limited company needs its company registration number, bank details, Unique Taxpayer Reference and an estimate of taxable turnover for the next 12 months.

Applications for a registration exception must go by post on form VAT1, HMRC said.

After registering, HMRC will sign the business up to Making Tax Digital for VAT unless it is exempt or has applied for an exemption.