VAT registration is a legal requirement once your taxable turnover crosses £90,000 in any rolling 12-month period. Failing to register on time results in a penalty based on the VAT you should have charged during the unregistered period — and you will owe that VAT even if you never collected it from customers. Acting promptly and understanding the rules is essential.
The VAT registration threshold
The mandatory VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period. The deregistration threshold is £88,000. Both figures have been in place since April 2024.
Critically, the threshold is not based on your tax year, calendar year, or financial year. It is measured over any rolling 12-month window. You must check your cumulative taxable turnover at the end of every month by looking back 12 months. If you cross £90,000 at any point, the registration obligation is triggered.
| Threshold | Amount | Applies to |
|---|---|---|
| Registration threshold | £90,000 | Taxable turnover in any rolling 12-month period |
| Deregistration threshold | £88,000 | Taxable turnover — if you fall below this, you can deregister |
Once your turnover exceeds £90,000 in a rolling 12-month period, you have 30 days to notify HMRC and complete your registration. Your effective date of registration (EDR) is the first day of the month following the month in which you exceeded the threshold. From your EDR, you must charge VAT on all taxable supplies, keep digital VAT records, and file VAT returns.
The forward-looking test
There is a second registration trigger that operates independently of the rolling 12-month test. If you have reasonable grounds to believe your taxable turnover will exceed £90,000 in the next 30 days alone — not cumulatively, but in those 30 days specifically — you must register immediately, before the 30-day period ends.
This forward-looking test typically applies when you secure a large contract or project that will push you over the threshold in a single month. In this situation you cannot wait for the rolling 12-month rule to catch up — the registration obligation arises as soon as you have reasonable grounds to believe the threshold will be breached.
How to register for VAT online
Most businesses register for VAT online through HMRC's Government Gateway. You will need:
- A Government Gateway account (create one at gov.uk if you do not already have one)
- Your business name, address, and contact details
- Your business registration number (if a limited company)
- Your bank account details (for VAT refunds and Direct Debit setup)
- A description of your business activity and an estimate of your taxable turnover for the next 12 months
- Your effective date of registration (the date you crossed the threshold or expect to)
The online registration process typically takes 20 to 30 minutes. Once submitted, HMRC will process your application within 30 working days and issue your VAT registration certificate (VAT 4) and VAT registration number (a 9-digit number in the format GB 123 4567 89).
You can also register by post using form VAT 1, but this takes longer and is not recommended for businesses approaching or past the registration threshold.
Your VAT registration number
Once registered, your VAT number must appear on all VAT invoices you issue. The standard UK format is GB followed by a 9-digit number (for example, GB 123 456 789). You must not use a VAT number that is not your own — doing so is fraud.
If a customer asks you to confirm your VAT registration, they can verify it at HMRC's VAT number checker on GOV.UK. This is a public tool and does not require an account.
What you must do once registered
From your effective date of registration, you have a set of ongoing obligations:
- Charge VAT on all taxable supplies. Standard-rated supplies must include 20% VAT (or the applicable reduced rate). Your invoices must show your VAT number, the VAT rate, the net amount, the VAT amount, and the gross total.
- Keep digital VAT records. Under Making Tax Digital for VAT (MTD for VAT), all VAT-registered businesses must keep digital records of their VAT transactions and submit returns using HMRC-compatible software.
- File VAT returns and pay VAT owed. Most businesses file quarterly. Returns and payment are due one month and seven days after the end of each VAT period (for example, by 7 May for a quarter ending 31 March).
- Reclaim input VAT on business purchases. You can reclaim the VAT you pay on goods and services used for your business (subject to certain restrictions — VAT on car purchases, client entertainment, and personal use cannot generally be reclaimed).
Voluntary registration
You can register for VAT voluntarily even if your taxable turnover is below £90,000. The two main reasons to consider voluntary registration are:
- Your customers are VAT-registered businesses. If you supply VAT-registered businesses, they can reclaim the VAT you charge, so the 20% addition does not increase their cost to you. Meanwhile, you can reclaim all the VAT on your own business purchases.
- You have high VAT-inclusive costs. Start-ups and businesses with significant capital expenditure can reclaim input VAT immediately upon registering, improving cash flow during growth phases.
Voluntary registration is generally not appropriate if most of your customers are private individuals who cannot reclaim VAT. Adding 20% to your prices may make you uncompetitive, or absorbing the VAT yourself will reduce your margin by the equivalent amount.
Once you register voluntarily, you are subject to the same obligations as a mandatory registrant — MTD for VAT, quarterly returns, and VAT on all taxable supplies. You can deregister voluntarily if you decide it is no longer beneficial, as long as your taxable turnover is below the deregistration threshold (£88,000).
Exception from registration
If your turnover has temporarily exceeded £90,000 but you can demonstrate to HMRC that it will fall below the deregistration threshold of £88,000 within the next 12 months, you can apply for an exception from registration. HMRC will consider one-off contracts, seasonal spikes, or other exceptional circumstances.
You must apply for the exception before the 30-day registration deadline. If HMRC agrees, you do not need to register. However, if your turnover remains above the deregistration threshold, you will need to register from the original date.
VAT deregistration
You can deregister for VAT voluntarily if your taxable turnover falls below £88,000 in the next 12 months. You can also deregister if you stop making taxable supplies entirely. Deregistration is done online through your VAT online account.
On deregistration, you must:
- File a final VAT return for the period up to your deregistration date.
- Account for VAT on any assets you retain that you originally reclaimed VAT on (if their total value is above £1,000 and the VAT on them exceeds £1,000).
- Stop charging VAT from your deregistration date.
Key takeaways
- You must register for VAT when taxable turnover exceeds £90,000 in any rolling 12-month period — not the tax year. Monitor your monthly cumulative turnover.
- You have 30 days to notify HMRC once you cross the threshold; your effective date of registration is the first day of the following month.
- Late registration results in penalties (2%–15% of net VAT due) plus liability for VAT on all sales since the effective date — even VAT you never collected from customers.
- All VAT-registered businesses must comply with Making Tax Digital for VAT: digital records and returns submitted through HMRC-compatible software.
- Voluntary registration (below £90,000) can be beneficial when supplying VAT-registered businesses or reclaiming significant input VAT on startup costs.
Frequently asked questions
How long does VAT registration take?
Online VAT registration takes up to 30 working days for HMRC to process. During this period you should charge VAT on invoices and note "VAT registration applied for — VAT registration number to follow" as you do not yet have your number. Once your number is issued, reissue any outstanding invoices that did not include VAT, or adjust them retrospectively if possible.
Can I reclaim VAT on costs incurred before I registered?
Yes, subject to limits. Once registered, you can reclaim VAT on goods purchased up to four years before your registration date (if you still hold them and they are used in your business) and on services purchased up to six months before registration. Keep all receipts and invoices — HMRC may ask you to justify pre-registration claims.
What turnover counts towards the VAT threshold?
Only your taxable turnover counts — the value of VAT-taxable supplies (including zero-rated supplies). Exempt supplies (such as financial services, insurance, or certain rents) do not count towards the threshold. Supplies outside the scope of VAT (such as dividends or grants) also do not count. If most of your revenue is from exempt activities, you may never need to register even if your total income is high.
What happens if I charge VAT before I am registered?
Charging VAT before your VAT registration is in place is illegal. If you have done this, you cannot keep the VAT you charged — it belongs to HMRC but you also cannot remit it as you have no registration. The correct approach is to register as soon as possible and disclose the situation to HMRC. HMRC may accept the amounts charged as the VAT due from the effective date of registration, but there will likely be penalties involved.
Do I need to register for VAT if I only sell zero-rated goods?
You must register if your taxable turnover exceeds £90,000, even if all your supplies are zero-rated. Zero-rated supplies are taxable supplies — they count towards the registration threshold. However, once registered, you will owe no output VAT on your sales and can reclaim all input VAT on your purchases, often resulting in regular VAT repayments from HMRC. Some businesses trading entirely in zero-rated goods apply for voluntary registration to benefit from input VAT reclaims.