VAT Registration Threshold 2025

The 2025 VAT registration threshold is £90,000 of VAT taxable turnover, on a rolling 12 month basis.

This applies to all UK companies, LTD, LLC, PLC, and sole traders.

NETPs (non established companies or persons) must register immediately from the first sale. So if you’re not located in the UK and do business here, you must register immediately or face penalties. This includes service providers and e-commerce sellers.

If you wish to deregister, you can do so if your taxable turnover falls below £88,000.

Two ways you can be caught out

Rolling test - If you exceed the £90,000 threshold at any point in the last 12 months, at the end of the month you crossed the threshold, apply within 30 days.

Future test - If you expect your turnover to exceed £90,000 in the next 30 days, you must register before the end of that 30 day period.

If you register late, HMRC can charge you interest and penalties.

Example 1

You’re a UK based B2C company, every month for the last 9 months you’ve turned over £9,700, once you cross £90,000 in the 10th month, you have 30 days to apply.

Example 2

You’re a contractor and win a £100k job that lasts 3 weeks, register immediately.

Example 3

You’re an e-commerce seller based in Canada, and you ship a £11 item to the UK. You need to register right away.

Voluntary registration

You don’t have to wait to exceed £90,000 in turnover, for B2B it makes sense to register as soon as possible. That way, you can claim back VAT on expenses and have a more favourable perception when sending invoices. However, for B2C sales, where the VAT chain stops, you’ll usually want to delay registration as long as possible, potentially even trying to permanently stay below the threshold if it makes sense.

How to register for VAT

• Assess your position, do you need or want to apply?
• Decide which scheme you need: flat rate vs cash vs annual.
• Gather your information, entity details, address, business sector, turnover.
• Apply online here, or ask your accountant to register for you.
• Once you receive the letter from HMRC with your effective date, start charging VAT from that date.
• Update all your system, accounting software, e-commerce systems, etc.
• Register for making tax digital (MTD), so your digital systems can process returns.

Frequently Asked Questions

What's the VAT registration threshold?
£90,000. The deregistration threshold is £88,000.

When must I register if I exceed the threshold?
If you exceeded £90,000 at any time in the last 12 months.

Do reduced-rated sales count towards the threshold?
Yes. Reduced-rated sales (5%) are taxable supplies and count towards the £90,000 threshold.

Does the threshold apply to overseas (NETP) businesses?
No. You must register right away after the first sale.

What are the main VAT scheme thresholds?
You can join the flat rate VAT scheme under £150,000 and leave above £230,000 VAT-inclusive. You can also use Cash Accounting and Annual Accounting below £1.35 million and leave above £1.6 million.