UK VAT Threshold 2024/25: When Do You Have to Register for VAT?

What Is the UK VAT Registration Threshold in 2024/25?

The UK VAT registration threshold is £90,000 for the 2024/25 tax year. This was raised from £85,000 in April 2024 — the first increase in seven years — and represents the point at which a business must register for VAT with HMRC and begin charging VAT on its sales.

There are two key figures to keep in mind:

• Registration threshold: £90,000 — you must register once your taxable turnover exceeds this
• Deregistration threshold: £88,000 — you can apply to cancel your VAT registration if your turnover falls below this and you expect it to stay below £90,000

The threshold applies to your taxable turnover — that is, the total value of goods and services you sell that are not VAT-exempt. VAT-exempt supplies (such as certain financial services, health services, and education) do not count toward the threshold. Standard-rated (20%), reduced-rate (5%), and zero-rated supplies all count.

How the Rolling 12-Month Rule Works

The VAT threshold is not assessed on a tax year or calendar year basis — it is assessed on a rolling 12-month basis. At the end of every month, you must look back at the past 12 months and add up your taxable turnover. If the total exceeds £90,000, you have crossed the threshold.

This catches many business owners off guard. You could have a slow January through October, then two strong months in November and December, and suddenly cross the threshold without a single month of exceptional trading.

There is also a forward-looking test: if at any point you have reasonable grounds to believe that your taxable turnover in the next 30 days alone will exceed £90,000, you must register immediately — before the 30 days are up. This applies if you sign a large contract that would push you over in one go.

Mandatory VAT Registration — Deadlines and What Happens Next

Once you have exceeded the £90,000 threshold in a rolling 12-month period, the timeline is strict:

• Within 30 days of the end of the month you exceeded the threshold: notify HMRC and register for VAT
• Your effective VAT registration date: the first day of the second month after you went over — for example, if you exceeded in September, your registration date is 1 November
• From your registration date: you must charge VAT on all standard-rated and reduced-rate supplies, issue VAT invoices, and file regular VAT returns

Register online at gov.uk/vat-registration using your Government Gateway account. You will receive your VAT registration number within 30 working days, though HMRC can take longer during busy periods. You can start charging VAT from your registration date even before the number arrives — just issue the invoices with a note that your VAT number is pending.

Voluntary VAT Registration — Should You Register Early?

You do not have to wait until you reach £90,000. Any VAT-eligible business can register voluntarily at any turnover level. Whether this makes sense depends on your business model.

The most common scenario where voluntary registration makes financial sense: a professional services business whose clients are all VAT-registered companies. They can reclaim the 20% VAT on your invoices, so your prices are effectively the same to them — but you get to reclaim VAT on all your own business costs.

What You Need to Register for VAT With HMRC

Registration is completed online through your Government Gateway account at gov.uk/vat-registration. Before you start, gather:

• Your Unique Taxpayer Reference (UTR) or company registration number
• National Insurance number (for sole traders and partners)
• Business bank account details
• Contact address and details
• A description of your business activities
• Your expected taxable turnover for the next 12 months
• Details of any VAT-taxable assets or stock held at the date of registration (you can reclaim the VAT on these in your first return, subject to time limits)

The online form takes about 20 minutes. HMRC will send your VAT registration certificate (VAT4) by post, usually within 30 working days. Your VAT number, return dates, and the effective date of registration are all on this certificate.

If you need a VAT number urgently — for example, a client requires it before they will place an order — call the HMRC VAT helpline on 0300 200 3700 to request priority processing.

What Happens After You Register for VAT

Once registered, your main obligations are:

• Charge VAT on taxable supplies — add the correct rate (20%, 5%, or 0%) to your invoices and show the VAT amount separately
• Issue VAT invoices — these must include your VAT number, the rate charged, and the VAT amount
• File VAT returns — usually quarterly, due one month and seven days after the end of each VAT period
• Pay any VAT owed — the difference between VAT you collected (output VAT) and VAT you paid on business costs (input VAT)
• Keep VAT records — for at least six years

Making Tax Digital (MTD) for VAT is mandatory for all VAT-registered businesses. You must use MTD-compatible accounting software — such as Xero, QuickBooks, or Sage — to keep your VAT records and submit returns. You cannot file VAT returns via HMRC's old online portal. If you need help with MTD-compatible bookkeeping, an Indian CA firm can manage this for you at a fraction of UK accountant rates.

You can also reclaim VAT on business assets and stock purchased up to four years before your registration date (for goods) and six months before (for services), provided those items are still in use when you register. This can create a significant refund in your first return.

Penalties for Late or Missing VAT Registration

HMRC takes late VAT registration seriously. The penalty is calculated as a percentage of the VAT that should have been collected between the date you should have registered and the date you actually did:

The minimum penalty is £50. On top of the penalty, you owe all the VAT that should have been charged — plus interest. In cases of deliberate concealment, HMRC can impose penalties up to 100% of the VAT due.

If you realise you should have registered earlier, the best approach is to notify HMRC voluntarily and cooperate fully. HMRC may reduce the penalty for unprompted disclosure. Our tax preparation team has assisted UK clients in regularising their VAT position with HMRC — contact us if you are in this situation.

Frequently Asked Questions