Ceiling

How the UK VAT threshold works

Last updated 25 September 2026

The threshold

You must register for VAT once your VAT-taxable turnover goes over £90,000. Taxable turnover is everything you sell that is not VAT exempt or “out of scope” - for most sole traders and online sellers, that is simply their sales.

Any 12 months in a row - not the tax year

HMRC does not look at your tax year or the calendar year. At the end of every month, add up the 12 months that have just ended. If that total is over £90,000, you have gone over the threshold, even if no single tax year ever reached it.

An example. You start trading in October 2025 and bill £7,600 every month. The 2025/26 tax year holds only about £45,600 of that, and by the end of September 2026 the 2026/27 tax year holds about £45,600 more - both comfortably under. But October 2025 to September 2026 is 12 months in a row adding up to £91,200, so you went over at the end of September 2026.

Once you have gone over

  • Register within 30 days of the end of the month you went over. Over at the end of September means registering by 30 October.
  • VAT starts on the first day of the second month after. Over in September, and you charge VAT on sales from 1 November - even before your VAT number arrives.
  • Registering late still means paying the VAT due from the date you should have registered, and HMRC can add a penalty.

The 30-day look ahead

There is a second test. If you expect your taxable turnover to go over £90,000 in the next 30 days alone - one very large order, say - you must register by the end of those 30 days, and VAT starts from the day you realised.

Keeping track

The rolling total changes every month, as a new month joins and the oldest drops out, so the only way to know where you stand is to redo the sum each month. Ceiling does it for you: add each month’s sales, and it shows what you can still invoice this month without going over, and when you would cross at your recent rate. It is a tracking tool, not tax advice.

Wondering whether to stay under at all? What registering really costs.

Where this comes from

If your situation is unusual, check with an accountant.

How the UK VAT threshold works · Ceiling