Deadlines and admin
The VAT registration threshold for sole traders
VAT looks at what you sell, not what you keep, and it counts any twelve months in a row rather than the tax year.
A sole trader who invoices £7,600 a month reaches £91,200 over twelve months, which is above the £90,000 VAT registration threshold, so registration becomes compulsory. Two tests apply, and either is enough. The backward test adds up taxable turnover for the last twelve months, on a rolling basis, at the end of every month: not the tax year, not your accounting year. The forward test asks whether sales in the next 30 days alone will go over £90,000, which mostly matters when a single large contract lands. Pass the backward test and you have 30 days from the end of that month to register. Turnover means sales before expenses, so a profitable plumber and a busy one with thin margins are judged on the same figure. Below the threshold, registering is optional. Type your figures below to see where you stand.
VAT registration threshold: £90,000
Must you register?
Not yet
| Room left under the threshold | £6,000 |
| Rolling 12-month test | under |
| Next 30 days test | under |
Figures checked by Radif Partners · Editorial policy · How we calculate
Counting taxable turnover
Taxable turnover is everything you sell that is not VAT exempt or outside the scope of VAT. Zero-rated items count, reduced-rated items count, and so do some less obvious things: goods you hire out, business goods taken for personal use, goods bartered, part-exchanged or given away, and services bought from abroad under the reverse charge (GOV.UK, when to register for VAT). What does not count is income that is exempt, so a trader whose sales are wholly exempt never has to register on this test.
The figure is sales, before any costs. That is the trap for trades with heavy materials. A kitchen fitter turning over £90,400 with £30,000 of materials and van costs has £60,400 of profit, on which the income tax and Class 4 bill is £14,057, yet VAT is judged on the £90,400.
A rolling total, month by month
Here is that kitchen fitter in a first trading year. The total is checked at the end of each month; the last four months tell the story.
| Month | Sales in the month | Running 12-month total | Room under the threshold |
|---|---|---|---|
| Dec | £9,600 | £67,100 | £22,900 |
| Jan | £6,000 | £73,100 | £16,900 |
| Feb | £7,400 | £80,500 | £9,500 |
| Mar | £9,900 | £90,400 | over |
The running total goes over in the last month shown, and from then on the obligation to register applies. Once trading has gone on for more than a year, the oldest month drops out as each new month comes in, which is why a seasonal business can cross in summer and fall back below by winter.
Deadlines once you are over
The backward test
Register within 30 days of the end of the month in which the twelve-month total went over. Your effective date, from which you charge and owe VAT, is the first day of the second month after. A designer whose total goes over on 20 March 2027 must register by 30 April 2027 and is VAT registered from 1 May 2027.
The forward test
If you realise that sales in the next 30 days on their own will exceed £90,000, you register by the end of that 30-day period, and the effective date is the day you realised, not the day the money arrives. A builder who signs a large contract on 3 June 2026 that will be paid within the month registers by 2 July 2026, VAT registered from 3 June 2026.
Late registration does not cancel the VAT: you owe it on the sales made since the date you should have been registered, even if you did not charge it to customers, and a penalty may be added depending on the amount and the delay. If turnover went over only briefly, HMRC can grant an exception, but you have to apply and wait for its answer.
Voluntary registration
You can register with turnover under £90,000. GOV.UK mentions reclaiming VAT on business expenses as the reason to register early (GOV.UK, set up as a sole trader). The trade-off depends on who buys from you. A graphic designer working for VAT-registered companies adds VAT to invoices that clients are themselves accounting for; a dog groomer selling to the public has to choose between higher prices and a thinner margin. Once registered, the rules on returns and payment are the same as for compulsory registration.
VAT and Making Tax Digital for Income Tax
These are two separate systems. Making Tax Digital for Income Tax is triggered by qualifying income, also measured on turnover but over a tax year and with lower thresholds; the qualifying income page explains the count. If you are in both, the penalty points for late Income Tax submissions are kept separate from your VAT points (HMRC, MTD penalties). The £90,000 profit page shows the income tax side for a business near this size.