When Should I Register for VAT? Clear Guide for UK Small Businesses
- John Massey
- Aug 14, 2024
- 2 min read
Updated: Dec 11, 2025
If your small business is growing, the £90,000 VAT threshold can creep up faster than expected — especially if you don’t track turnover monthly. This guide explains exactly when you must register, how HMRC measures turnover, and how to avoid costly penalties.
VAT Registration Threshold 📊
Your business must register for VAT if:
1. You expect your VAT-taxable turnover to exceed £90,000 in the next 30 days
This applies if you have a large contract, busy month or major event ahead.
2. Your business exceeded £90,000 turnover in the last 12 months
Avoid this common mistake ⚠️ HMRC requires a rolling 12-month count — not the company’s accounting year turnover.
How to Count Turnover on a Rolling 12-Month Basis 📆
If you're approaching the £90,000 threshold, check your turnover at the end of each month for the previous 12 months. Don't wait until year-end!
As a small business accountant in Stockport, I see late VAT registrations often caused by incorrect turnover tracking — and the penalties the can be severe.
Download and use our VAT Turnover Tracker Spreadsheet to monitor this correctly 👇
This free spreadsheet tracker calculates your rolling 12-month turnover and flags when registration is approaching and required.
If you’re unsure whether you're approaching the threshold, get in touch for guidance — it takes minutes to check but can save thousands.
When Must You Register?
You must submit your VAT registration within 30 days of the end of the month in which you crossed the threshold.
Example: At the end of June, your rolling turnover exceeds £90,000.– Registration must be submitted by 30 July – Effective Date of Registration (EDR): 1 August
💡Note - You trade over the threshold during July but do not charge VAT until 1 August.
More details: Late VAT penalties explained ⚠️
Voluntary VAT Registration: Should You Do It?
If your customers are mostly the general public or small businesses:
⛔ VAT becomes a business cost.Example: If your gross margin is 50%, expect to increase prices by ~10% just to stand still.
If your customers are VAT-registered businesses:
✅ VAT registration can be beneficial.Your customers reclaim your output VAT, and you reclaim your input VAT.
📢 Seek advice before registering — the tax saving must outweigh the admin.
Key Takeaways 📌
💷 The VAT threshold is £90,000, and HMRC requires a rolling 12-month test.
⚠️ Late registration penalties can be significant — proactive tracking avoids issues.
🔄 Voluntary registration is usually beneficial only if your customers are VAT-registered.
📂 Use our VAT Turnover Tracker spreadsheet and seek advice if you’re close to the threshold.
Unsure whether you're approaching the threshold? Get in touch for guidance — it takes minutes to check but can save thousands.
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