In short
- You must register when your VAT-taxable turnover in the last 12 months goes over £90,000, or will in the next 30 days.
- Once registered, you charge VAT on your sales, show it on your invoices and send a VAT return every quarter.
- You can register voluntarily below the threshold, which suits businesses whose customers are mostly VAT registered.
VAT is the tax most small businesses meet first and understand last. The rules are mostly about one number, a threshold, and what happens to your invoices when you cross it.
The threshold is a rolling 12 months
Add up your VAT-taxable turnover (sales that aren’t exempt) for the last 12 months, at the end of every month. Not the tax year, not the calendar year: the last 12 months. If it goes over £90,000, you must register within 30 days of the end of that month. You must also register straight away if you expect to go over £90,000 in the next 30 days alone.
| What | Figure |
|---|---|
| Registration threshold | £90,000 in any rolling 12 months |
| Deregistration threshold | £88,000 |
| Standard rate | 20% |
| Reduced rate (for example home energy) | 5% |
| Zero rate (for example most food, books) | 0% |
What changes once you’re registered
- You add VAT to your prices for VAT-able sales, and pay it to HMRC.
- You can reclaim the VAT on most of your business costs.
- Your invoices must be VAT invoices: your VAT number, the date of supply, the rate and amount of VAT on each line, and the totals with and without VAT.
- You send a VAT return, usually every quarter, through Making Tax Digital for VAT software. Your accountant usually does this.
- Brand guidelines, 1 × £1,800
- £1,800.00
- Website design, 1 × £1,200
- £1,200.00
- VAT at 20%
- £600.00
- Total due
- £3,600.00
The £600 isn’t income. It goes to HMRC, less the VAT you paid on your own costs.
Registering before you have to
If most of your customers are VAT-registered businesses, registering early can make sense: they reclaim the VAT you charge, so it costs them nothing, and you reclaim VAT on your own costs. If most of your customers are the public, registering early usually means raising prices or earning less.
Watch the rolling 12 months, not the tax year. The threshold doesn’t wait for April.
Rates, thresholds and dates in this guide are as of 14 October 2026. They’re illustrative: rules change, so check with your accountant before a big decision. It’s general information, not tax or legal advice.
Rates shown are illustrative and are checked against gov.uk before launch.