When to register for VAT UK (2026): £90,000 threshold for trades
When to register for VAT UK (2026), short answer: you must register if your taxable turnover goes over £90,000 in the last 12 months (historic test), or if you expect it to go over £90,000 in the next 30 days (future test). The compulsory threshold has been £90,000 since 1 April 2024 (increased from £85,000). You may apply to cancel registration if taxable turnover falls below £88,000. Soften every edge case with GOV.UK VAT registration, VAT thresholds and your accountant. InvoiceAdept does not file VAT returns or MTD for VAT.
This is a tight 2026 refresher for UK trades — not a Notice 700/1 rewrite. Sister pages cover schemes and invoice wording: Flat Rate VAT scheme for trades, domestic reverse charge invoice UK, CIS explained. Need clean invoices while you decide? Use the free invoice generator (Free: 5 invoices; Pro £7.99 / Pro+ £12.99).
Compulsory threshold: £90,000 (not £85,000)
Since 1 April 2024 the compulsory VAT registration threshold is £90,000. Older posts that still treat £85,000 as the live line are stale. Deregistration (optional cancel) sits at £88,000. The test is taxable turnover, not profit and not “what landed after CIS”.
Rule | Figure / test | What you do |
|---|---|---|
Compulsory registration | Taxable turnover more than £90,000 | Register — historic or future test |
Deregistration (optional) | Taxable turnover less than £88,000 | You may cancel; you do not have to |
Historic test | Last 12 months over £90,000 | Apply within 30 days of the end of the month you went over |
Future test | Expect over £90,000 in the next 30 days | Apply by the end of that 30-day period |
Voluntary | Below £90,000 | Optional — weigh reclaim, credibility and admin |
Confirm live figures on GOV.UK before you act. Illustrative only: a steady day-rate trade can cross £90,000 on turnover alone before materials mark-up.
Historic 12-month vs future 30-day tests
Most trades hit the historic rolling 12-month test first. The future test catches one large accepted contract or PO that alone clears £90,000 in the next 30 days.
Historic test | Future test | |
|---|---|---|
Trigger | Last 12 months’ taxable turnover over £90,000 | You expect taxable turnover over £90,000 in the next 30 days |
Deadline to apply | Within 30 days of the end of the month you went over | By the end of that 30-day period |
Effective date (typical) | First day of the second month after going over | The date you realised you would go over |
Common trade trigger | Steady climb across a year | One large contract / PO accepted |
Illustrative historic: on 15 July rolling 12-month taxable turnover first hits £100,000 → apply by 30 August; effective date often 1 September. Illustrative future: on 1 May you accept a £100,000 package paid end of May → apply by 30 May; effective date often 1 May. Soften deadlines and effective dates with GOV.UK / your accountant.
What counts as taxable turnover
Taxable turnover is the value of supplies that are not VAT-exempt or out of scope. It includes standard-, reduced- and zero-rated goods and services, many reverse-charge values, and related items listed on GOV.UK. It is not profit. CIS deductions do not reduce the VAT registration test — count the full taxable supply.
Usually counts | Usually does not |
|---|---|
Labour and materials you supply (taxable) | True VAT-exempt / out-of-scope income |
Zero-rated supplies (still taxable turnover) | “Net after CIS” cash in the bank |
Domestic reverse charge values (when they apply) | Profit after expenses |
Hire / loan / certain self-supply rules (GOV.UK) | Invented exclusions because “CIS already took 20%” |
If a line is borderline exempt, check GOV.UK or ask your accountant — do not omit taxable sales to stay under £90,000 on paper.
Compulsory vs voluntary registration
Below £90,000 you can still register voluntarily. You must register when a compulsory test is met (unless HMRC agrees an exception / exemption route — apply; do not assume).
Route | When | Must you? |
|---|---|---|
Compulsory — historic | Last 12 months over £90,000 | Yes |
Compulsory — future | Expect over £90,000 in next 30 days | Yes |
Voluntary | Under £90,000 | Optional |
Exception / exemption | Temporary overshoot; mostly zero-rated supplies | Only with HMRC agreement |
Voluntary often helps when most customers are VAT-registered businesses, you reclaim meaningful input VAT, or tenders expect a VAT number. Voluntary often hurts when almost all work is private domestic (gross price rises) and material spend is low. Soften the choice with your accountant — this page is not advice to register or not.
Deregistration at £88,000
If taxable turnover falls below £88,000, you can apply to cancel VAT registration. It is optional. Staying registered can still make sense if input VAT reclaim and commercial clients outweigh the admin. Use HMRC’s cancel process — do not silently stop charging VAT. Confirm the live deregistration figure on GOV.UK before you act.
Flat Rate Scheme (high level only)
Schemes change how you account for VAT after registration. They do not remove compulsory registration when the £90,000 tests are met.
Scheme cue | High-level GOV.UK framing |
|---|---|
Flat Rate join | VAT turnover £150,000 or less (excl. VAT) if eligible |
Flat Rate leave | More than £230,000 |
Idea | Pay a fixed % of turnover; generally limited purchase VAT reclaim |
Trade % | Look up the live GOV.UK rate for your sector — do not invent a percentage |
Flat Rate can suit low VAT-cost service trades and hurt materials-heavy ones. Sister deep-dive: Flat Rate VAT scheme for trades. Soften join/leave with HMRC / your accountant.
Making Tax Digital (MTD) for VAT
VAT-registered businesses are expected to keep digital records and submit returns with MTD-compatible software. Software does not invent extra time on deadlines. InvoiceAdept helps you raise invoices and track what you are owed; it does not submit VAT returns under MTD. Pair invoicing with compatible filing software or your agent.
CIS ≠ VAT ≠ domestic reverse charge
Trades mix these constantly. Keep them separate on the invoice and in your head.
Topic | What it is | What it is not |
|---|---|---|
VAT registration | Whether you must (or choose to) be on the VAT register | Not decided by CIS status alone |
CIS deduction | Income tax / NICs machinery on labour under construction ops | Not VAT; does not replace charging or accounting for VAT |
Domestic reverse charge | On certain construction supplies between VAT-registered parties (when tests met), customer accounts for VAT | Not for private householders; not for 0-rated work |
Reverse-charge values can still count toward taxable turnover for registration. Never reverse-charge a private householder. Details: domestic reverse charge invoice UK and CIS explained.
What InvoiceAdept does and does not do
InvoiceAdept helps UK trades raise clear invoices. Free covers 5 invoices a month. Pro is £7.99. Pro+ is £12.99 (CIS invoice lines). It does not register you for VAT, choose Flat Rate percentages, file MTD VAT returns, or tell HMRC you crossed £90,000. Keep registration with GOV.UK + your accountant; keep filing with compatible MTD software. Build PDFs in the invoice builder.
Monthly monitoring checklist
Check | Pass / fail cue |
|---|---|
Rolling 12-month taxable turnover | Over £90,000 → historic test clock |
Next 30 days of accepted work / POs | Single package over £90,000 → future test |
CIS labour totals | CIS withheld ≠ lower VAT turnover |
Reverse charge values | Still count toward threshold tests when they apply |
Distance to £90,000 | Plan voluntary vs wait; fix pricing early |
Digital records tidy | MTD needs clean digital links later |
Frequently asked questions
Is the VAT threshold still £85,000?
No. Compulsory registration is £90,000 since 1 April 2024 (increased from £85,000). Deregistration sits at £88,000. Confirm on GOV.UK.
Does the £90,000 test use profit or expenses?
No. It uses taxable turnover (value of taxable supplies), not profit and not turnover minus materials.
What is the difference between the historic and future tests?
Historic: last 12 months already over £90,000. Future: you expect to go over in the next 30 days. Deadlines and effective dates differ — see the table above and GOV.UK.
Do CIS deductions reduce my VAT taxable turnover?
No. CIS is separate. Count the full value of the taxable supply.
Does domestic reverse charge turnover count toward £90,000?
Often yes when those supplies are in taxable turnover under GOV.UK rules. Soften invoice treatment with the reverse charge guide and your accountant.
Should I join the Flat Rate Scheme?
Only after you check live GOV.UK trade rates and run numbers with an accountant. Join framing is often VAT turnover £150,000 or less (excl. VAT); leave above £230,000. This page will not invent a percentage.
Does InvoiceAdept file my VAT return under MTD?
No. InvoiceAdept helps you invoice and get paid. MTD for VAT needs compatible software (or your agent).
Can I deregister below £88,000?
You can apply to cancel if taxable turnover is less than £88,000. You do not have to cancel. Use HMRC’s process.
Next step
Track rolling 12-month taxable turnover and big POs against £90,000, keep CIS and reverse charge out of the VAT decision, and register through Government Gateway when a compulsory test bites (or voluntarily if that is the right trade-off). Soften exceptions, Flat Rate and MTD filing with GOV.UK / your accountant. Build clear trade invoices in the free invoice generator (Free: 5; Pro £7.99; Pro+ £12.99). InvoiceAdept does not file VAT returns, MTD updates, CIS300 or Self Assessment.
Last reviewed: 16 September 2026. General information for UK trades only — not tax, legal or accounting advice. Thresholds can change; always check GOV.UK. InvoiceAdept / Tech Me Today Ltd (15917255).
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