Situations
I'm close to the VAT threshold
If your sales are getting close to the VAT registration threshold, here is what to do, in order.
The short answer
You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days. Check your rolling 12-month total each month. If you go over, you have 30 days from the end of that month to register. This is a legal requirement.
1. Work out your taxable turnover
GOV.UK says taxable turnover is the total value of everything you sell that is not VAT exempt or "out of scope". It includes zero-rated and reduced-rated goods as well as standard-rated ones.1 It is not the same as profit, and it is not always the same as your total sales.
Add up your taxable turnover for the last 12 months, not your accounting year. Do it again each month, because the 12-month window moves.
2. Know the two tests
You must register if either applies:1
| Test | Deadline to register | Effective date of registration |
|---|---|---|
| Taxable turnover for the last 12 months went over £90,000 | Within 30 days of the end of the month when you went over | The first day of the second month after you went over |
| You expect taxable turnover to go over £90,000 in the next 30 days | By the end of that 30-day period | The date you realised, not the date turnover went over |
GOV.UK gives this example: if your 12-month taxable turnover first goes over the threshold on 15 July, you must register by 30 August and your effective date is 1 September.1
3. Register on time
If you register late, GOV.UK says you must pay VAT on any sales made since the date you should have registered, and you might have to pay a penalty.1 If you go over the threshold only temporarily, you can apply to HMRC for a registration "exception".1
You can also choose to register voluntarily below the threshold.1 Whether that makes sense depends on your customers and costs: it is worth asking an accountant.
4. Get ready for VAT returns
GOV.UK says all VAT-registered businesses should now be signed up for Making Tax Digital for VAT, and that you must keep some VAT records digitally unless you are exempt from those rules. It says to use compatible software, or other software such as spreadsheets, that connects to HMRC's systems, and to wait for HMRC to confirm your registration before downloading compatible software.2 Check the GOV.UK page for the current rules before you choose software.
5. Decide what help you need
This part is our judgement, not a rule. Some businesses keep their own records in software and pay an accountant to check and file the returns. Others have a bookkeeper keep the records and an accountant handle the returns and questions about prices. An accountant can also help you work out how VAT affects your prices and margins before you register. See Accountant or bookkeeper?
If turnover falls later
If your taxable turnover falls below £88,000, you can ask HMRC to cancel your registration.3
Sources
- GOV.UK, "Register for VAT: When to register" (including taxable turnover, late registration, temporary exceptions and voluntary registration). gov.uk/vat-registration/when-to-register. Checked 12 October 2026.
- GOV.UK, "Charge, reclaim and record VAT": "Charging VAT" and "Keeping VAT records". gov.uk/charge-reclaim-record-vat/keeping-vat-records. Checked 12 October 2026. (The older GOV.UK Making Tax Digital for VAT guidance addresses now redirect to this guide.)
- GOV.UK, "Register for VAT: Cancel your VAT registration". gov.uk/register-for-vat/cancel-your-registration. Checked 12 October 2026.