When to register for VAT UK (2026): £90,000 threshold for trades
When to register for VAT UK (2026): £90,000 threshold for trades
By InvoiceAdept Team11 March 2026Updated 3 September 202614 min read
Quick answer: You must register for VAT if your taxable turnover goes over £90,000 in the last 12 months, or if you expect it to go over £90,000 in the next 30 days. Those are the compulsory tests on GOV.UK — when to register for VAT. The compulsory threshold has been £90,000 since 1 April 2024 (increased from £85,000, where it had been frozen since 2017). You can apply to cancel registration if taxable turnover falls below £88,000 — see VAT thresholds.
This guide is for UK tradespeople and small construction businesses who need a clear, practical read of the registration rules — not a substitute for Notice 700/1 or advice from your accountant. InvoiceAdept helps you raise clean invoices and keep records; it does not file VAT returns or decide whether you must register.
Rules summarised from GOV.UK / HMRC. Worked figures are illustrations only. General information — not tax or legal advice. InvoiceAdept is from Tech Me Today Ltd, Companies House 15917255, ICO ZB944663. Free: five invoices a month. Pro £7.99. Pro+ £12.99 (CIS). WhatsApp send on Pro. No platform fee on Stripe.
Sister pages: domestic reverse charge invoice UK · CIS explained UK subcontractors · how to invoice a UK client as a tradesperson · VAT-ready invoice generator.
In short
Rule | Figure / test | What you do |
|---|---|---|
Compulsory registration | Taxable turnover more than £90,000 | Register — historic 12-month test or future 30-day 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 | Register within 30 days of the end of the month you went over |
Future test | Expect to go over £90,000 in the next 30 days | Register by the end of that 30-day period |
Voluntary | Below £90,000 | Optional — weigh credibility, input VAT and admin |
Flat Rate join (if eligible) | VAT turnover £150,000 or less (excl. VAT) | Apply to HMRC — check current trade rates on GOV.UK, do not guess |
Flat Rate leave | More than £230,000 | Leave scheme when you cross the leave threshold |
Thresholds: GOV.UK VAT thresholds and VAT registration thresholds overview.
The £90,000 threshold in 2026 (keep the history straight)
Since 1 April 2024, the compulsory VAT registration threshold sits at £90,000. This was increased from £85,000, where it had been frozen since 2017. The deregistration threshold is £88,000.
Do not quote the old £85,000 figure as the live compulsory threshold. Do not invent a “calendar year” test — HMRC looks at taxable turnover, usually on a rolling basis for the historic test, and at what you expect in the next 30 days for the future test.
For trades, the threshold is easier to hit than it feels on a quiet Monday. Illustrative only: an electrician charging £400 a day, five days a week for 46 working weeks, turns over about £92,000 before materials mark-up or overtime. That is over the threshold on turnover alone — profit is irrelevant.
What counts as taxable turnover
Taxable turnover is the total value of everything you sell or supply that is not VAT-exempt or “out of scope”. It is not profit, and it is not “what landed in the bank after CIS”.
According to GOV.UK — when to register, taxable turnover includes (among other things):
zero-rated goods
reduced-rated goods
standard-rated goods
goods you hired or loaned to customers
business goods used for personal reasons
goods you bartered, part-exchanged or gave as gifts
services you received from businesses in other countries that you had to reverse-charge
goods and services subject to the domestic reverse charge
building work over £100,000 your business did for itself
It does not include VAT-exempt or out-of-scope supplies. If you are unsure whether a line of income is exempt, check GOV.UK or ask your accountant — do not omit taxable sales because “CIS already took 20%”.
For a typical trade invoice, labour and materials you supply count in full. Zero-rated supplies (when they genuinely are zero-rated) still count toward taxable turnover. Domestic reverse charge values still count. True VAT-exempt or out-of-scope income does not. The CIS deduction itself is irrelevant to the VAT test — it is income tax machinery, not VAT.
CIS deductions are not VAT. A contractor withholding CIS on labour does not reduce your taxable turnover for the VAT registration test. You still count the full value of the taxable supply.
Many UK tradespeople also find it helpful to review VAT invoice requirements for UK trades at this stage.
Historic 12-month test and future 30-day test
Historic 12-month test (most trades hit this first)
You must register if your total taxable turnover for the last 12 months goes over £90,000.
From GOV.UK:
Register within 30 days of the end of the month when you went over the threshold.
Your effective date of registration is the first day of the second month after you go over the threshold.
GOV.UK-style example (historic): On 15 July your total taxable turnover for the last 12 months is £100,000 — the first time it has gone over. You must register by 30 August. Your effective date of registration is 1 September.
Practical habit for a sole trader or limited company on site: at month-end, add the last twelve months of taxable invoices (including zero-rated and reverse-charge values where they count). If the total crosses £90,000, the clock has started — do not wait for your year-end accounts.
Miss the deadline and HMRC can still treat you as liable from the date you should have been registered. You may owe VAT on sales made without charging it, and there can be a late-registration penalty depending on how much is owed and how late you are. That is why monitoring beats guessing.
Future 30-day test (big contracts and purchase orders)
You must also register if you realise that your total taxable turnover is going to go over £90,000 in the next 30 days — even if the last 12 months are still under the line.
From GOV.UK:
Register by the end of that 30-day period.
Your effective date of registration is the date you realised, not the date the money actually landed.
GOV.UK-style example (future): On 1 May you arrange a £100,000 contract. You will be paid at the end of May. You must submit the registration application by 30 May. Effective date of registration is 1 May.
This is the trap for trades who live on a few large commercial packages. One accepted tender, one main-contractor PO, or one design-and-build stage that alone clears £90,000 can trigger the future test before the historic rolling total does.
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 day-rate climb across a year | One large contract / PO accepted |
Compulsory vs voluntary registration
Route | When | Must you? |
|---|---|---|
Compulsory — historic | Last 12 months over £90,000 | Yes |
Compulsory — future | Expect over £90,000 in next 30 days | Yes |
Compulsory — other cases | e.g. certain non-UK / NETP situations (see Notice 700/1 / GOV.UK) | Yes when those rules apply |
Voluntary | Taxable turnover under £90,000 | Optional |
Exception / exemption routes | Temporary overshoot; mostly zero-rated supplies | Only with HMRC agreement — apply, do not assume |
You can choose to register below the threshold (voluntary registration). You must pay HMRC any VAT you owe from the date they register you. You do not have to register if you only sell VAT-exempt or out-of-scope goods and services — but most active trades do not live entirely in that world.
If turnover goes over the threshold temporarily, you can apply for a registration exception; HMRC decides. If most of your taxable supplies are zero-rated, you may be able to apply for exemption from registration — again, only with HMRC’s agreement. Details: when to register for VAT.
Voluntary registration: pros and cons for UK trades
Voluntary registration is not “free credibility”. It is a trade-off between reclaiming input VAT, looking established on commercial tenders, and taking on returns, digital records and pricing conversations with homeowners.
Upside for trades | Downside for trades |
|---|---|
Reclaim input VAT on tools, van kit, merchant materials (under normal rules / your scheme) | Extra 20% on prices for customers who cannot reclaim (most householders) |
Looks more established on commercial tender lists | Quarterly (or other) VAT returns and MTD-compatible software |
Avoids a sudden “we’re VAT registered now” shock if you are already close to £90,000 | Cash-flow: you may charge VAT before you reclaim or before customers pay |
Aligns with VAT-registered main contractors who expect a VAT number on the PO | Flat Rate (if you join) usually means you cannot reclaim most purchase VAT |
Cleaner paperwork when reverse charge / CIS packages start appearing | Admin time — or accountant fees — every return period |
When voluntary often makes sense
Most of your customers are VAT-registered businesses who reclaim what you charge.
You buy a lot of VAT-inclusive materials and capital kit and want to reclaim input VAT under standard accounting.
You are within striking distance of £90,000 and growing.
Commercial clients won’t put you on the approved list without a VAT number.
When voluntary often hurts
Almost all of your work is private domestic and customers compare gross prices WhatsApp-to-WhatsApp.
Your material spend is low and you would gain little input VAT.
You are not ready for digital record-keeping and return deadlines.
Illustrative only (not a forecast): a carpenter buying £15,000 of timber and materials a year at standard rate could be looking at reclaiming about £3,000 of VAT under standard VAT accounting — if registration and the invoices support it. If those customers are mostly other VAT-registered firms, the output VAT is often neutral to them. If they are mostly homeowners, you are explaining a higher ticket every time.
Pricing after you register (homeowner vs commercial)
Once registered you must charge the correct VAT rate on taxable supplies and show VAT properly on invoices. For most lived-in domestic repairs and alterations that is the standard rate (currently 20%) unless a listed relief genuinely applies — do not invent 0% on a kitchen refurb in an occupied house.
Customer type | What usually happens to the quote | Who feels the VAT |
|---|---|---|
VAT-registered contractor / commercial | Add VAT on the invoice; they reclaim (subject to their own rules) | Often cash-flow only for them |
Private householder / non-registered small firm | Gross price rises unless you absorb some of it | The customer — they cannot reclaim |
Domestic reverse charge job (when tests met) | You may not charge VAT in the normal way; customer accounts for it | Special invoice wording — see reverse charge guide |
Zero-rated supply (when genuinely zero-rated) | Show 0%; still a VAT invoice if you are registered | Different paperwork — still part of taxable turnover tests |
Common approaches trades use (business choice, not HMRC rules):
Pass on the full 20% to commercial clients.
Split the pain on domestic work (raise prices part-way and absorb the rest) — only if your margin allows.
Review day rates and packages before the effective date so the first VAT invoice is not a surprise.
Absorbing VAT without a plan is how busy months turn into thin ones. Passing it on without explaining the line on the invoice is how payment threads stall.
If you are sorting this alongside other compliance work, read VAT registration for tradespeople.
Deregistration at £88,000
If you are already VAT-registered and your taxable turnover falls below £88,000, you can apply to cancel registration. It is optional. Staying registered can still make sense if you reclaim more input VAT than the admin costs you, or if commercial clients expect a VAT number.
Check the live figures on GOV.UK VAT thresholds before you act. Cancelling has consequences for invoices, display of VAT numbers, and any VAT due up to the cancellation date — use HMRC’s process, not a silent stop on charging VAT.
Flat Rate Scheme and other schemes (high level only)
Once registered you still account for VAT. Schemes change how you calculate and report — they do not remove the need to register when the compulsory tests are met.
Scheme | Join threshold (GOV.UK) | Leave threshold (GOV.UK) | High-level idea |
|---|---|---|---|
Flat Rate Scheme | VAT turnover £150,000 or less (excl. VAT) | More than £230,000 | Pay a fixed percentage of turnover to HMRC; generally cannot reclaim VAT on purchases except certain capital assets over £2,000 |
Cash Accounting | £1.35 million or less | More than £1.6 million | Account for VAT when you are paid / when you pay, not purely on invoice date |
Annual Accounting | £1.35 million or less | More than £1.6 million | One annual return pattern with interim payments |
Standard VAT accounting | Default | — | Charge VAT on sales, reclaim allowable input VAT, pay / reclaim the difference |
Flat Rate Scheme overview: GOV.UK — VAT Flat Rate Scheme. Threshold table: VAT thresholds.
Do not invent a trade percentage. Flat rates vary by trade sector and can change. Look up your current rate on GOV.UK (or ask your accountant) before you model savings. Older blog posts that quote a single “electrician rate” without citing the live GOV.UK table go stale quickly — this page will not do that.
Talk to an accountant before joining Flat Rate. It often suits service-heavy businesses with low VAT-bearing costs; it can be a poor fit if you buy a lot of materials and would reclaim more under standard accounting.
Making Tax Digital (MTD) for VAT — records and software
VAT-registered businesses are expected to keep digital records and submit returns using Making Tax Digital compatible software. HMRC’s position is that VAT-registered businesses should already be in MTD for VAT; remaining cases are signed up automatically unless exempt.
What that means in practice for a trade:
Keep the digital links between your records and the return your software submits.
Use software HMRC lists as compatible for VAT returns.
Deadlines and return frequency still matter — software does not invent extra time.
InvoiceAdept does not file VAT returns. It helps you create professional invoices, track what you are owed, and keep clearer job records. Your VAT return still goes through compatible MTD software (or your accountant’s). Do not treat an invoicing app as a substitute for HMRC-compatible VAT filing software.
More on charging and recording VAT sits across GOV.UK’s VAT guides; start from How VAT works and your MTD-compatible software’s own HMRC submission flow.
CIS, reverse charge and VAT — three different machines
Trades mix these up 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 your 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 standard/reduced-rated construction supplies between VAT-registered parties (when tests met), customer accounts for VAT | Not for private householders; not for 0-rated work |
High-level reverse charge reminder:
Never reverse-charge a private householder.
Never reverse-charge 0-rated work.
When reverse charge applies, the value of those supplies still counts toward taxable turnover for registration tests (GOV.UK).
Full invoice wording and tests: domestic reverse charge invoice UK. CIS overview: CIS explained for UK subcontractors. HMRC supplier page: how to use the VAT reverse charge for building and construction services.
Related: see how to submit a VAT return online for practical next steps.
Late registration, how to register, and invoice particulars
If you register late, you must pay VAT on taxable sales from the date you should have been registered. Penalties depend on how much is owed and how late you are — see GOV.UK rather than blog “up to 100%” folklore alone.
Once registered, invoices for VAT-registered customers need the usual particulars (VAT number, rates, net and VAT in sterling, and so on). HMRC’s record-keeping rules live in guidance such as Notice 700/21 (record keeping). Who should register in edge cases is covered in VAT Notice 700/1 (should I be registered for VAT) — use the GOV.UK / HMRC notice text, not a paraphrase of someone else’s blog.
Late payment interest (B2B statutory interest), if you chase unpaid invoices: when Bank Rate is 3.75%, the statutory rate under the Late Payment of Commercial Debts framework is Bank Rate + 8% = 11.75%. That is about getting paid, not about VAT registration itself — include it on payment terms only where the legislation applies (typically B2B). Consumers are a different regime.
How to register (process overview)
Register online through Government Gateway. You will typically need identity / business details (National Insurance number or company number, addresses, bank details, expected turnover). HMRC issues a VAT registration certificate with your VAT number, effective date and return periods.
Timing varies; do not leave a future-test contract until the week before the first invoice. From the effective date you must account for VAT correctly — including on jobs already in flight if they fall on or after that date under the tax point rules.
Non-established / overseas situations and some takeovers have extra rules — see when to register and Notice 700/1 rather than this summary.
Monthly monitoring checklist for trades
Check | Cadence | Pass / fail cue |
|---|---|---|
Rolling 12-month taxable turnover | Month-end | Over £90,000 → historic test clock |
Next 30 days of accepted work / POs | When you win a large job | Single package over £90,000 → future test |
Exempt vs taxable split | When income types change | Do not omit taxable lines |
CIS labour totals | Each CIS period | CIS withheld ≠ lower VAT turnover |
Reverse charge values | Each RC invoice | Still count toward threshold tests |
Distance to £90,000 | Monthly | Plan voluntary vs wait; fix pricing early |
Digital records tidy | Weekly | MTD needs clean digital links later |
Use a simple spreadsheet or your accounting software’s turnover report. InvoiceAdept helps you see what you have billed; your accountant or MTD software owns the return maths.
What InvoiceAdept is for (and what it is not)
InvoiceAdept is built for UK trades who need fast, clear invoices — deposits, variations, CIS labour/materials splits, WhatsApp send on Pro, and card links without a platform fee on Stripe.
Free: five invoices a month.
Pro £7.99: higher limits, WhatsApp send.
Pro+ £12.99: CIS-focused features for subcontractor billing.
It does not register you for VAT, choose Flat Rate percentages, file MTD VAT returns, or tell HMRC you crossed £90,000. Keep registration decisions with GOV.UK + your accountant; keep filing with compatible MTD software.
Start here: invoice generator. Pricing: invoiceadept.com/pricing.
Worth pairing this with our guide to the Flat Rate VAT Scheme for trades.
Frequently asked questions
Does the £90,000 threshold include expenses or profit?
No. It is based on taxable turnover (the value of taxable supplies), not profit and not “turnover minus materials”. Expenses do not reduce the registration test.
Was the threshold always £90,000?
No. Since 1 April 2024 it is £90,000, increased from £85,000 (frozen since 2017). Deregistration sits at £88,000. Confirm on GOV.UK VAT thresholds.
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 tables above and GOV.UK.
Do CIS deductions reduce my VAT taxable turnover?
No. CIS is separate. Count the full value of the taxable supply. CIS deductions ≠ VAT.
Does domestic reverse charge turnover count toward the £90,000 test?
Yes — GOV.UK lists goods and services subject to the domestic reverse charge among the items included in taxable turnover for registration. Details and invoice treatment: domestic reverse charge invoice UK.
Should I join the Flat Rate Scheme as a tradesperson?
Maybe — only after you check current GOV.UK rates for your trade sector and run the numbers with an accountant. Join threshold is 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) to submit returns. InvoiceAdept does not file VAT returns.
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.
What if I go over the threshold only temporarily?
You can apply for a registration exception. HMRC decides. Do not assume silence equals permission.
Where do I verify the live thresholds?
https://www.gov.uk/vat-registration-thresholds and https://www.gov.uk/how-vat-works/vat-thresholds, plus when to register.
Sources and disclaimer
HMRC VAT Notice 700/1 (should I be registered for VAT) — use the official notice for edge cases
General information for UK trades only. Not tax, legal or accounting advice. Thresholds and scheme rules can change — always check GOV.UK. InvoiceAdept / Tech Me Today Ltd (15917255, ICO ZB944663) does not file VAT returns or CIS300s to HMRC.
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