The threshold is a rolling 12-month test, not a tax year one. This projects your turnover forward and tells you the month you cross it.
You must register for VAT once your taxable turnover over any rolling 12-month period exceeds £90,000. The word that catches people out is rolling. It is not your tax year or your accounting year. It is the last 12 months, recalculated at the end of every month.
Once you cross it you must register within 30 days of the end of the month in which you went over, and you become VAT-registered from the first day of the second month after crossing. You also need to register if you expect to exceed £90,000 in the next 30 days alone, and in that case registration is immediate.
Taxable turnover only. Exclude anything VAT-exempt or outside the scope.
Here is exactly what the tool does with your numbers.
The forecast walks forward month by month. Each month it adds your expected sales (grown by your growth rate) and removes one month of historic turnover, because that month falls out of the rolling 12-month window.
One simplification worth knowing about. The month dropping out of the window is taken as your last 12 months divided by twelve, because the tool does not ask for each historic month individually. If your trading was very uneven, perhaps a seasonal spike or a single large project, the real month falling out could be much larger or smaller, and your actual crossing point will differ. If you are close to the line, check your month-by-month figures properly.
£90,000 of taxable turnover in any rolling 12-month period. It rose from £85,000 on 1 April 2024. The deregistration threshold is £88,000.
Taxable turnover means sales of goods and services that are not exempt from VAT. It is measured before any costs, so it is turnover rather than profit.
No, and this is the most common misunderstanding. The test is a rolling 12-month period, recalculated at the end of every month. It has nothing to do with your tax year or accounting year.
That means a strong few months can push you over even if your annual figures look comfortable, and you need to be checking the running total monthly rather than once a year.
You must still account for VAT from the date you should have been registered, which usually means paying it out of sales you already made without charging it. HMRC can also apply a penalty based on how much VAT was due and how late the registration was.
If you think you may already be over the threshold, get advice straight away rather than waiting for a year end.
It can be worth it if your customers are mostly VAT-registered businesses, because they reclaim the VAT you charge while you reclaim VAT on your own costs. The net effect is often a saving.
If you sell mainly to consumers it usually hurts, because your prices effectively rise 20% with no benefit to the customer. Weigh it against the extra administration of returns and Making Tax Digital record keeping.
Built by Veris Labs
These calculators are a small, public version of what we do. The Veris Labs suite covers marketing and delivery, and where nothing off the shelf fits, we build it around your business instead.
