What is the VAT threshold? When do I have to register?

What is the VAT threshold and when do I have to register for VAT?

Some of the most often asked questions around Value Added Tax, or VAT is what is the threshold, and when is it necessary to register for VAT?

Here we explain the thresholds which would require your business to legally register for VAT.

Compulsory VAT Registration

Legally, you must register for VAT when:

  • Your VAT-taxable turnover exceeds the current threshold of £85,000 over the last 12 months.

You have to register within 30 days of the end of the month when you went over the threshold. Your effective date of registration is the first day of the second month after you go over the threshold.

  • You expect your VAT-taxable turnover to exceed the threshold in the next 30-day period.

You have to register by the end of that 30-day period. Your effective date of registration is the date you realised you would go over, not the date your turnover went over the threshold.

  • You only sell goods or services that are exempt from VAT, but you purchase goods for more than £85,000 from EU VAT registered suppliers.
  • If you take over a VAT registered business, you may have to register for VAT.

If you know your turnover will reach the threshold soon, you should allow enough time to register. If you fail to notify HMRC in time, you may be liable to pay a penalty.

Is it possible to get an exception?

You can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily.

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