The VAT threshold: when does a sole trader have to register?

The rule

You must register if your VAT-taxable sales in any rolling 12-month period go over £90,000. It isn't the tax year: at the end of every month, add up the last 12 months.

The deadline

Register within 30 days of the end of the month you went over. You're then registered from the first day of the month after that, and must charge VAT from then.

Going over in one go

If you expect to go over £90,000 in the next 30 days alone, for example from one big contract, you must register straight away, by the end of those 30 days.

What counts

• Your sales before costs, not your profit
• Work charged at 0% or 5% VAT still counts
• VAT-exempt sales don't count
• Wages from a job don't count

If you register late

HMRC can ask for the VAT you should have charged from the date you should have registered, out of your own pocket if you can't go back to customers, plus a penalty. Keep an eye on it from about £80,000.

Registering voluntarily

You can register below the threshold. It can make sense if most customers are VAT-registered businesses that reclaim it, as you can reclaim VAT on materials and your van. For homeowners it usually makes you dearer.