Important: This guide covers the basics of when you need to register for VAT. If you’re already VAT registered, MalgraBooks has a VAT Service for members, so get in touch and we’ll help.
As your business grows, you’ll be earning more income.
You must register for VAT (Value Added Tax) if your VAT taxable turnover (income) goes over the VAT threshold in any rolling 12-month period. Taxable turnover is your sales before expenses, not your profit.
The VAT registration threshold is £90,000. It has been at this level since 1 April 2024, and the Budget on 28 October 2026 kept it at £90,000 from April 2027.
If your taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days alone, you must register with HMRC for VAT. There is only a 30-day period to register.
VAT runs over the last 12 months and not the tax year. At the end of every month, look back over the 12 months just gone. The dates are not fixed to the tax year, which runs from 6 April to 5 April each year.
Example: Neil’s sales for the 12 months to 31 March 2027 come to £91,000. He has 30 days from the end of March to register, so he must apply by 30 April 2027. His registration starts on 1 May 2027, and he charges VAT from then on.
What if I register late?
If you register late for VAT after passing the threshold, you will need to pay HMRC any VAT which is due from the date you should have registered, even if you didn’t charge it to your customers. A penalty may also be applied depending on how late your registration is.
How to check if you’re approaching the threshold
It is seen as a good thing to keep accurate records on your business, and our online guide provides details of items you’ll need to consider to keep track of your business turnover, expenses and (ultimately) the profit made.
From your monthly accounts, you should be able to view your overall turnover for the business. This is any income which has been received, such as member fees, shop sales or other business income, before any expenses have been deducted. You can find a list (not exhaustive) in this guide.
How to register
Most businesses can register online with HMRC. Once you’re registered, you’ll need to use Making Tax Digital for VAT to keep your VAT records and send your VAT returns. This is separate from Making Tax Digital for Income Tax.
De-registration
You can de-register from VAT when you’re no longer eligible to be registered. This may be when you cease trading, or if your taxable turnover drops below £88,000. This can also be completed online with HMRC.
VAT Registration Exceptions
If you go over the threshold, but only temporarily, you can apply for an exception from registering.
For example, if you exceed the threshold over a 12-month period but have evidence to show your taxable turnover in the next 12 months will be £88,000 or less (e.g. ending self-employment, reducing group cover, or one unusually large job), you can ask HMRC for an exception. HMRC will tell you if you get one.
You’ll need to write to HMRC to request this.