When do I need to register for VAT?

You must register for VAT when your taxable turnover for the last 12 months goes over £90,000. This is a rolling test, not a tax year test, so check your turnover every month.

• Looking back: register within 30 days of the end of the month in which you went over £90,000. Your registration takes effect from the first day of the second month after you crossed the threshold. For example, if you went over on 15 July, you must register by 30 August and the effective date is 1 September.
• Looking forward: if you expect your taxable turnover to go over £90,000 within the next 30 days alone, you must register by the end of that 30 day period. Your effective date is the date you realised, not the date you actually crossed.

Taxable turnover includes zero-rated sales but not exempt sales, and it is the total across the whole business, not per customer or per contract.

You can also register voluntarily below £90,000. That can help if you buy a lot of VAT-able goods and services and want to reclaim the VAT, or if you sell mainly to VAT-registered businesses. Once registered you must charge VAT, file returns and keep digital VAT records.

Registering late can mean owing VAT from the date you should have registered, plus penalties.

Legislation: Value Added Tax Act 1994, Schedule 1 (registration in respect of taxable supplies), in particular paragraphs 1, 5 and 6.