When Do You Need to Register for VAT?

The VAT registration threshold for 2025 is £90,000.
This is based on VAT-taxable turnover over any rolling 12-month period.

The rule applies to all UK businesses.
This includes sole traders, LTD companies, PLCs, and partnerships.

Overseas and Non-UK Businesses (NETPs)

Non-UK businesses must register straight away.
This applies from the first sale made in the UK.

This includes service providers and online sellers.
Late registration can lead to penalties.

VAT Deregistration Threshold

You can deregister for VAT if turnover falls below £88,000.
This must be expected to stay below the limit.

Two Ways Businesses Get Caught Out

Rolling 12-Month Test

If turnover exceeds £90,000 at any point in 12 months, registration is required.
You must apply within 30 days of the month you pass the limit.

Future Turnover Test

If you expect turnover to exceed £90,000 in the next 30 days, register early.
You must register before the 30-day period ends.

Late Registration

Registering late can lead to interest charges.
HMRC may also apply financial penalties.

Examples

Example 1
A UK B2C business earns £9,700 each month.
After crossing £90,000 in month ten, apply within 30 days.

Example 2
A contractor wins a £100,000 job lasting three weeks.
VAT registration is required immediately.

Example 3
A Canadian online seller ships an £11 item to the UK.
VAT registration is required from the first sale.

Voluntary VAT Registration

You do not need to wait until you reach £90,000.
Some businesses choose to register earlier.

For B2B sales, early registration can be useful.
You can reclaim VAT on costs and appear more established.

For B2C sales, delayed registration often makes sense.
Some businesses try to stay below the threshold.

How to Register for VAT

First, check if registration is required or optional.
Next, choose the right VAT scheme.

Gather your business details and turnover figures.
Apply online or ask your accountant to apply for you.

Once approved, charge VAT from the effective date.
Update your accounting and sales systems.

Register for Making Tax Digital to submit VAT returns.

Frequently Asked Questions

What is the VAT registration threshold?
£90,000. The deregistration limit is £88,000.

When must I register after passing the threshold?
Within 30 days of the month you exceed £90,000.

Do reduced-rate sales count toward the threshold?
Yes. All taxable sales count, including 5% rate items.

Does the threshold apply to overseas businesses?
No. Non-UK businesses must register from the first sale.

What are the main VAT scheme limits?
Flat Rate Scheme is under £150,000 and leaves above £230,000.
Cash and Annual Accounting apply under £1.35 million and leave above £1.6 million.