VAT registration threshold still £90,000 — the two tests that catch businesses out

The VAT registration threshold remains £90,000 of taxable turnover, but plenty of growing businesses still get caught out because they only check one of the two tests. HMRC applies both. Test one looks backwards: at the end of every month, you must check your taxable turnover for the previous 12 months, and if it has gone over £90,000 you must register within 30 days. Test two looks forwards: if you expect to exceed £90,000 in the next 30 days alone — a single large contract will do it — you must register by the end of that 30-day period.

Once a test is triggered, registration is compulsory and late registration is expensive: you owe VAT on sales from the date you should have registered, plus potential penalties. Note that taxable turnover includes zero-rated sales but excludes VAT-exempt and out-of-scope supplies, so check your figures carefully rather than using headline revenue. On the other side, the deregistration threshold is £88,000 — if your turnover falls below it, you can ask HMRC to cancel your registration. Set a monthly diary reminder to run the rolling 12-month check; it takes five minutes and is the simplest way to stay compliant.