When do you need to register for VAT? A practical turnover check

Run both registration tests

As at 26 July 2026, HMRC says you must register when taxable turnover for the last 12 months goes over £90,000. This is a rolling 12-month test, not a check that waits for the end of your accounting year.

A separate forward-looking test applies when you expect taxable turnover to exceed £90,000 in the next 30 days. HMRC says the effective date is the date you realised this, so a single large contract can bring the decision forward.

• Review the rolling total at least monthly, and more often when sales are close to the threshold.
• Include standard-rated, reduced-rated and zero-rated supplies; do not assume zero-rated sales are excluded.
• Check exempt and out-of-scope income separately rather than treating every receipt as taxable turnover.

Model the price customers will actually pay

Registration changes the numbers differently depending on whether customers can reclaim VAT. A business selling mainly to VAT-registered customers may be able to quote a net price plus VAT. A consumer-facing business may need to absorb some or all of the VAT within a market price.

Use the VAT calculator to compare net, VAT and gross amounts. Then use the target pricing and profit margin calculators to test whether the proposed customer price still covers unit costs, payment fees and the intended margin.

Plan the effective date, not just the application

HMRC says a business can charge VAT and reclaim eligible VAT on purchases from its effective date of registration. Keep sales and purchase records ready, confirm which rates apply to what you sell, and allow for the cash timing of VAT collected and reclaimed.

Businesses below the threshold can register voluntarily, but that is a commercial and administrative decision rather than an automatic saving. Compare the input VAT you may reclaim with the pricing impact, reporting work and customer mix before deciding.

What to do when you are close

Build a simple rolling forecast that shows current taxable turnover, contracted work expected in the next 30 days and the customer-price effect of registration. Set an internal trigger below the legal threshold so there is time to confirm the position with an accountant or HMRC.

This article summarises official guidance available on the publication date. VAT treatment can depend on the supply, customer and location, so use the linked HMRC guidance for the rules that apply to your business.

Official sources

• GOV.UK: When to register for VAT
• GOV.UK: VAT thresholds
• GOV.UK: How VAT works