The VAT registration threshold, explained
The rule sounds simple: register for VAT when taxable turnover passes £90,000. The detail that catches businesses out is how, and when, that figure is measured.
A rolling twelve months, not your accounting year
The test is not "did we turn over £90,000 last financial year". It is a rolling one: at the end of every month, look back over the previous twelve months. If taxable turnover in that window has exceeded the threshold, you must register, normally within thirty days of the end of the month in which you went over. There is a second trigger too: if you expect taxable turnover in the next thirty days alone to pass the threshold, registration is due immediately.
What counts towards the figure
Taxable turnover means the value of everything you sell that is not VAT-exempt, including zero-rated sales. It is easy to undercount by forgetting one-off jobs, recharges or a strong seasonal run. Businesses hovering near the line need the rolling figure watched monthly, which is straightforward when the bookkeeping is current and impossible when it is not.
Registering by choice
Registration below the threshold is voluntary, and sometimes pays. If your customers are mostly VAT-registered businesses, they reclaim the VAT you charge, while you reclaim VAT on your own costs. If your customers are the general public, registration effectively raises your prices or cuts your margin, so the decision needs more care.
Missing the deadline
Register late and HMRC will expect the VAT you should have charged from the date you ought to have registered, whether or not you actually charged it, plus potentially a penalty. If you think you may already be over the line, the cheapest moment to deal with it is now.
Threshold correct at the time of writing; it is set by the government and can change at a Budget. For advice on your own position, including scheme choice once registered, get in touch.