Recent History
The sales turnover threshold at which a business would ordinarily be required to register for VAT in the UK has been £85,000 since 1st April 2018, only now changing to £90,000 from 1st April 2024.
Why am I writing this?
The UK VAT threshold of £80,000 plus in the last decade until it recently became £90,000 was not that easy to reach for many single-owner micro businesses, and some could be quite relaxed, believing they were never going to go anywhere near that figure. The rise in inflation in the UK in recent years has made £80,000 plus in sales far more common and easier to reach without the business feeling great profits. People, particularly if they haven’t engaged with an accountant, are at risk of exceeding that figure without realizing it on time. I’m saying “people” because it is far more common for unincorporated businesses to operate without an accountant than incorporated businesses taking advantage of the limited company structure. However, even if you do have an ‘on the ball’ accountant, it is the business owner’s responsibility to ensure they are registered for VAT if they exceed the VAT registration threshold.
Understanding the Registration Rules
If you are not yet VAT registered, you may think that looking at your annual accounts is a sufficient check on whether you should become VAT registered. Or you may think it’s a calendar yearly check or a tax yearly check. The 12 months that HMRC refer to is actually a rolling 12 months from the 1st of the first month to the last day of the last month. So every month, you consider the previous 12 months, and every month that you do this, the 12-month period you are looking at has a 1-month difference to the 12-month period you looked at last month.
Confused? Ok, all you have to do right now is look at the 12-month period from 1st June 2023 to 31st May 2024 (the last full 12-month period). Have you made sales in excess of £90,000 in that period? If not, then wait until July and look at 1st July 2023 to 30th June 2024. I’ve drawn up a table below for you to keep doing this every month.
Time to Register
Once your business has exceeded £90,000 (since 1/4/2024) in sales, you have 30 days from the end of the month that you went over the threshold to register for VAT.
What Date Will My VAT Registration Start?
You will be VAT registered from the first day of the second month after you go over the threshold.
Questions
Q: What if I exceeded the VAT threshold in the middle of the month?
A: It is the last day of the month in which you exceeded the VAT threshold that you need to consider.
Q: What if I exceeded the VAT threshold because I had an exceptionally large order in one month only, but I don’t expect that to happen again?
A: You can apply for a registration ‘exception’ if you exceed the VAT threshold temporarily.
Q: What if my sales are exempt from VAT?
A: Check with an accountant that this is the case, and if so, you do not need to register.
Q: What if all of my sales are zero-rated for VAT?
A: Check with an accountant that this is the case. You will still need to register for VAT, but HMRC may offer you an exemption, which you and your accountant may or may not think is the best way forward.
Q: What if I already know I’m going to go over the VAT threshold next month?
A: If you are going to exceed the VAT threshold in the next 30 days, you have to register by the end of the 30-day period.
Q: I already have an accountant – isn’t it their responsibility to tell me if I need to register for VAT?
A: Yes, if they have agreed to do that. Check your contract.
Q: I’m selling to an overseas country only – I don’t have to register for VAT in the UK, do I?
A: Yes, you do if you exceed the VAT threshold. Discuss with an accountant.
| VAT REGISTRATION CHECKER TABLE | |||||
| Date from | Date to | Sales over £90,000 – Action | Sales NOT over £90,000 – Action | Submit vat registration by | Date I should be registered from |
| 01/05/2023 | 30/4/2024 | Yes. Register for Vat | Look next month | 30/05/2024 | 01/07/2024 |
| 01/06/2023 | 31/05/2024 | Yes. Register for Vat | Look next month | 30/06/2024 | 01/08/2024 |
| 01/07/2023 | 30/06/2024 | Yes. Register for Vat | Look next month | 30/07/2024 | 01/09/2024 |
| 01/08/2023 | 31/07/2024 | Yes. Register for Vat | Look next month | 30/08/2024 | 01/10/2024 |
| 01/09/2023 | 31/08/2024 | Yes. Register for Vat | Look next month | 30/09/2024 | 01/11/2024 |
| 01/10/2023 | 30/09/2024 | Yes. Register for Vat | Look next month | 30/10/2024 | 01/12/2024 |
| 01/11/2023 | 31/10/2024 | Yes. Register for Vat | Look next month | 30/11/2024 | 01/01/2025 |
| 01/12/2023 | 30/11/2024 | Yes. Register for Vat | Look next month | 30/12/2024 | 01/02/2025 |
| 01/01/2024 | 31/12/2024 | Yes. Register for Vat | Look next month | 30/01/2024 | 01/03/2025 |
| 01/02/2024 | 31/01/2025 | Yes. Register for Vat | Look next month | 02/03/2025 | 01/04/2025 |
| 01/03/2024 | 28/02/2025 | Yes. Register for Vat | Look next month | 30/03/2025 | 01/05/2025 |
| 01/04/2025 | 31/03/2025 | Yes. Register for Vat | Look next month | 30/04/2025 | 01/06/2025 |
Scope
This blog is concerned with UK VAT only.
Disclaimer
This blog is intended to raise awareness and hopes to prevent small UK businesses from unwittingly exceeding the VAT threshold without taking action. It is not a comprehensive guide for the intricacies of VAT compliance in the UK or any other country. If you are in any doubt at all about your UK or other country VAT responsibilities, you should consult with your accountant.