The £90,000 VAT Threshold: When a Trade Has to Register

↑ Part of the Tax & VAT series · The UK Trade's VAT & CIS Guide

You must register for VAT when your taxable turnover passes £90,000 in any rolling 12-month period — not the tax year, not the calendar year, any 12 months ending on any day. You must also register if you expect to pass £90,000 in the next 30 days alone (one big contract can do it). The threshold has been £90,000 since April 2024, and for a trade working mainly for homeowners it's one of the biggest pricing decisions in the business, because registering makes your work 20% dearer to people who can't claim it back.

This page sits under our main VAT & CIS guide, which covers what happens after you register — rates, returns and the reverse charge.

Part 1The rolling 12 months, properly understood

---

The test isn't "did I turn over £90,000 this tax year". At the end of every month, you look back over the previous 12: if the total of your taxable sales in that window has passed £90,000, the clock starts. You have until the end of the following month to register, and your registration takes effect from the first day of the month after that.

Say your window passes £90,000 during September: you check at the end of September and see it, you must register by 31 October, and you're VAT-registered from 1 November. Miss it, and HMRC treats you as registered from when you should have been — meaning you owe VAT on sales you never charged it on, out of your own pocket, plus a late-registration penalty on top.

The 30-day version is quicker: the moment you expect a single 30-day period to pass £90,000 on its own, you register immediately, effective from the date you formed that expectation.

Part 2What counts towards the £90,000

---

Your taxable turnover: everything you sell that would carry VAT at 20%, 5% — and, counter-intuitively, 0%. Zero-rated work (like qualifying new-build) still counts towards the threshold. Exempt income doesn't, and neither do wages from employment. Materials you recharge to customers count in full — it's turnover, not profit, and a materials-heavy trade reaches £90,000 far sooner than their drawings suggest. Work where the Domestic Reverse Charge applies still counts towards your turnover even though the customer accounts for the VAT.

Part 3The cliff edge for domestic trades

---

For a VAT-registered trade, business customers barely notice — they reclaim the VAT. Homeowners can't. The day you register, the same job costs your domestic customers 20% more, or you absorb some of it and thin your margin. That's why so many trades hover deliberately just under the threshold, turning down winter work to stay there.

If you're approaching it, face the decision head-on rather than drifting over by accident:

• Going over deliberately works best with a plan: build the VAT into your pricing, lean into business/CIS work where VAT doesn't hurt the customer, and remember you'll now reclaim VAT on materials, the van, tools and fuel, which claws some of it back.
• Staying under deliberately is legal — it's called managing your turnover — but check what it costs you. Turning away £20,000 of work to avoid charging VAT on £90,000 is often a worse deal than registering and pricing properly.
• What you can't do is artificially split one business into two ("disaggregation" — the wife invoices the labour, you invoice the materials). HMRC has seen every version of it and can direct the pieces be treated as one business.

Part 4If you do register

---

Registration is online and the certificate usually arrives within weeks. From your effective date you charge VAT at the correct rate, file returns through MTD-compatible software, and reclaim input VAT on your costs. You can also reclaim some pre-registration VAT: on goods still on hand bought up to 4 years before, and services up to 6 months before. Deregistration is available if turnover falls below £88,000.

Common questionsVAT threshold FAQ

---

Is the VAT threshold £85,000 or £90,000?

£90,000, since April 2024. The old £85,000 figure still floats around the internet — it's out of date.

Is it per tax year?

No — any rolling 12-month period, checked at the end of each month. This is the single most misunderstood part, and it's how trades get caught in month eight of a good run.

Does zero-rated work count towards the threshold?

Yes. Zero-rated is still taxable turnover (at 0%), so new-build work counts. Only exempt income sits outside the test.

What happens if I register late?

HMRC backdates your registration to when you should have registered. You owe the VAT on everything since — typically un-recoverable from past customers — plus a penalty scaled to how late you were. This is the expensive way to find out.

Can I register voluntarily below £90,000?

Yes, and for a trade doing mostly business or CIS work it can pay: you reclaim VAT on materials and overheads, and your business customers reclaim what you charge. For mainly domestic work it usually just makes you dearer.

This guide is general information for UK tradespeople, current to the best of our knowledge in 2026. Rules, rates and thresholds change, and how they apply depends on your specific circumstances. It is not tax, accounting or legal advice. Always confirm your position with HMRC, a qualified accountant or a solicitor before relying on it. TradeDraft accepts no liability for decisions made on the basis of this guide. Questions: hello@tradedraft.co.uk.

Tip: press Ctrl / Cmd + P to save this guide as a PDF.