The VAT threshold, and when you must register
The threshold is £90,000 of taxable turnover. There are two separate tests, they have different deadlines, and they produce different start dates.
The threshold
You must register for VAT once your taxable turnover passes £90,000. Taxable turnover means everything you sell that is not exempt from VAT, before any costs are taken off. It is not profit, and it is not restricted to sales on which you actually charge VAT: zero-rated sales count towards the threshold too.
The period is a rolling twelve months, not your accounting year and not the tax year. You look back over the last twelve months at the end of every month.
The backward test: looking at the last twelve months
If total taxable turnover for the last twelve months has gone over £90,000, you must register within thirty days of the end of the month in which you passed it. Registration then takes effect from the first day of the second month after you went over.
So if you passed the threshold at some point during August, you must register by 30th September, and you are registered from 1st October. The gap is deliberate, and it is the part people misread: you are not registered from the day you crossed the line.
The forward test: looking at the next thirty days
If you expect taxable turnover to pass £90,000 in the next thirty days alone, you must register by the end of that thirty-day period, and registration takes effect from the date you realised it was going to happen, not the date turnover actually passed the threshold.
This test catches the single large contract. A business turning over £40,000 a year that signs a £95,000 job to be delivered next month is caught by the forward test even though the backward test is nowhere near being met.
The two tests compared
| Backward test | Forward test | |
|---|---|---|
| What you measure | Taxable turnover over the last twelve months | Expected taxable turnover over the next thirty days on its own |
| Deadline to register | Thirty days after the end of the month you went over | The end of that thirty-day period |
| Registered from | The first day of the second month after you went over | The date you realised |
What to do about it
Once registered you charge VAT on your sales, you can reclaim VAT on most of your purchases, and you file returns. For a business selling mainly to other VAT-registered businesses that is often no bad thing, because your customers reclaim what you charge them. For a business selling to the public it is effectively a price rise or a margin cut, so it is worth modelling before you get near the threshold rather than after.
The Flat Rate Scheme is worth looking at if your costs are low, and it has its own entry threshold of £150,000 of taxable turnover excluding VAT.
Sources
Figures checked against GOV.UK on 18th September 2026. Threshold, both tests, deadlines and effective dates: GOV.UK, VAT registration, when to register. Every figure this site uses is listed with its date and source on the rates page.