The VAT Registration Threshold Explained (£90,000)

The VAT threshold is one of those numbers every growing business needs to watch. Here's how the £90,000 threshold works — and why it matters for MTD income tax too.

The £90,000 rolling threshold

You must register for VAT if:

• your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period, or
• you expect to exceed £90,000 in the next 30 days alone.

The key word is rolling. It's not your tax-year turnover — at the end of every month you look back over the last 12 months. That's why businesses can cross the threshold mid-year without noticing.

What counts toward it

• Standard, reduced and zero-rated sales all count as taxable turnover.
• Genuinely exempt sales don't.
• One-off spikes count too — a big month can tip a rolling total over.

Registering (and the deadline)

If you go over on the rolling test, you must register within 30 days of the end of the month you exceeded it. Miss it and you can face penalties plus VAT you should have charged.

Voluntary registration

You can register below £90,000. It can make sense if:

• most customers are VAT-registered businesses who reclaim the VAT;
• you have significant input VAT to reclaim on purchases;
• you want the credibility of being VAT-registered.

It's less attractive if you sell to consumers, since it effectively raises your prices by 20% or squeezes your margin.

Why this matters for MTD income tax

The £90,000 figure does double duty. In MTD for Income Tax it's the limit for using simplified "consolidated" expenses — a single lump-sum expenses figure:

Turnover	Expenses reporting
Up to £90,000	Can use consolidated (single figure)
Over £90,000	Must use itemised expense categories

So if your turnover crosses £90,000, it affects both your VAT position and how you report expenses in your quarterly updates. Good software flags this rather than letting you report the wrong way.

Key takeaways

• Register for VAT once rolling 12-month turnover exceeds £90,000 (or you'll pass it in 30 days).
• It's a rolling, not tax-year, test — watch your trailing 12 months.
• Voluntary registration suits business-to-business sellers.
• The same £90,000 sets the consolidated-expenses limit in MTD income tax.

This article is general information, not tax advice. Check the current VAT threshold at gov.uk or speak to your accountant.