Knowing the right moment to register for VAT can save you from penalties, backpayments, and a whole lot of hassle with HMRC. But figuring out exactly when that moment arrives isn’t always straightforward.
If you’re a sole trader or freelancer wondering whether it’s time to register, here’s your guide.
Registration requirements
There are two specific situations where VAT registration becomes legally required, and both revolve around your taxable turnover hitting £90,000.
💡 Taxable turnover is the total value of everything you sell, minus anything that is VAT exempt or out of scope.
Scenario one: Your income over the past year has crossed £90,000
If you earn more than £90,000 in taxable turnover across any consecutive 12-month stretch, HMRC requires you to register within 30 days of crossing that line.
The tricky bit? This isn’t tied to the tax year running from April to April. It’s about any 12 consecutive months. For example, if you earn £90,000 between July 2025 and June 2026, that would trigger the registration requirement, even though it spans two separate tax years.
Scenario two: A large payment will push you over £90,000 within a month
Sometimes you can see the threshold coming before you actually cross it. If you’ve landed a big contract that means your taxable turnover will exceed £90,000 within the next 30 days, registration is required right away.
Don’t wait for the money to arrive – in this situation, HMRC wants you registered based on anticipated earnings, not actual payment dates.
Understanding what income counts
Not every pound you earn factors into this calculation, so it’s worth being clear about what HMRC includes.
Standard-rated goods and services you provide as a sole trader count towards the VAT registration threshold. Zero-rated items, where you charge VAT at 0%, count as well – even though no actual VAT changes hands in these sales.
But VAT-exempt sales – think certain financial or healthcare services – don’t contribute to your taxable turnover at all.
One more thing: if you work a salaried job alongside your sole trader or freelance work, only your self-employed earnings matter here. Employment income stays separate from the VAT threshold calculation.
💡 More VAT questions? We’ve got answers! Check out our complete guide to VAT for sole traders.
Hnry tracks your VAT income automatically
Monitoring your taxable turnover across rolling 12-month periods while running your business isn’t easy. Registration deadlines can sneak up fast!
Hnry users get alerts as they approach the £90,000 mark, so there’s never any doubt about when registration is due. Once registered, we handle VAT calculations and submit all returns through Making Tax Digital-compliant software.
You focus on the fun stuff (like the actual job), and we ensure HMRC gets everything they need, exactly when they need it. Easy!
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