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Guides··8 min read

Over the UK VAT threshold selling online? The £90,000 test, the deadline and what to do now

You must register for VAT when your taxable turnover for the last 12 months goes over £90,000, or when you expect the next 30 days alone to go over it. Here is how HMRC's two tests work, the deadline once you cross the line, what counts as turnover, and what happens if you register late.

OneSol Team

A woman checks sales receipts and VAT figures on a tablet showing the OneSol website during a morning train journey.

Sales picked up, and now a worried thought: do I need to register for VAT? Or worse, the realisation that you went over the line a while ago.

The short answer from GOV.UK: you must register for VAT when your total taxable turnover for the last 12 months goes over £90,000, or when you realise it is going to go over £90,000 in the next 30 days on their own. Once you cross, the clock is short, usually 30 days from the end of that month. Under the line, registering is your choice. Below is how each test works, what counts towards the £90,000, and what to do if you are already over. This post is only about VAT; telling HMRC about your income in the first place is a separate question with its own rules.

What counts towards the £90,000

GOV.UK defines taxable turnover as the total value of everything you sell that is not VAT exempt or 'out of scope'. Three things catch people out.

It is sales, not profit. A seller who takes £95,000 and keeps £20,000 after materials, postage and fees is still over £90,000. And it is the total across your business, not per shop or per product line: your website, a marketplace, craft fairs, coaching and classes all add up.

The threshold itself rose from £85,000 to £90,000 on 1 April 2024, so older articles quoting £85,000 are out of date. GOV.UK still shows £90,000 today.

  • Included: standard-rated, reduced-rated and zero-rated sales. VAT Notice 700/1 says zero-rated supplies count, even though no VAT would be charged on them.
  • Included: goods you hire or loan out, business goods used for personal reasons, and goods you barter, part-exchange or give away, according to GOV.UK's list.
  • Left out: VAT exempt sales, and sales of capital assets such as equipment or vehicles you have sold, according to VAT Notice 700/1.
  • Not business at all: the notice says non-business activity can include something done as a hobby. Once you are regularly making and selling for money, treat it as business turnover.
Sell from a free OneSol page through your own Stripe or PayPal account, so every sale lands in one account you can match against your records. Free plan included.Start free →

The two tests, and the deadline for each

HMRC applies two tests. You have to register if you meet either one.

The 12-month test looks back. VAT Notice 700/1 says you check, at the end of any month, the value of your taxable supplies in the previous 12 months. It is a rolling window, not the tax year or the calendar year. So you can stay under £90,000 for every tax year and still cross it in the 12 months ending in, say, November, because a strong Christmas season falls into one window. GOV.UK gives the deadline as within 30 days of the end of the month when you went over, and the effective date of registration as the first day of the second month after you go over. Its worked example: turnover for the last 12 months reaches £100,000 on 15 July, so you must register by 30 August, and you are registered from 1 September.

The 30-day test looks forward. VAT Notice 700/1 says you must register if you expect the value of your taxable supplies in the next 30 day period alone to go over the threshold. That is about one very large month, not a gradual climb: a single wholesale order, a corporate contract or a launch that will bring in more than £90,000 within 30 days. GOV.UK says you have to register by the end of that 30-day period, and your effective date is the date you realised, not the date your turnover went over. Its example: on 1 May you arrange a £100,000 contract, so you must apply by 30 May, and your effective date is 1 May.

You have just gone over: what to do now

Work out the month you crossed £90,000 on a rolling 12-month total. Then ask whether it was a one-off. GOV.UK says you can apply for a registration 'exception' if your taxable turnover goes over the threshold temporarily, and VAT Notice 700/1 sets the condition: you have to show HMRC that your taxable supplies will not go over the deregistration threshold, £88,000, in the next 12 months. It is not automatic. You apply, HMRC decides and writes to tell you, and if you don't get the exception, HMRC registers you, so apply within the normal deadline, not instead of it.

If the higher sales are here to stay, work through these steps, which follow GOV.UK's 'Register for VAT' guide and VAT Notice 700/1.

  • Register online. GOV.UK says you can usually register for VAT online, and you can save your progress and come back to it. You get a 9-digit VAT registration number, which you must put on all your invoices, plus confirmation of your effective date of registration and details of your first return.
  • Keep records from your effective date. You owe VAT on your sales from that date, even if your number has not arrived yet.
  • While you wait, do not show VAT on your invoices. GOV.UK says you cannot include VAT on your invoices until you get your number, but you can increase your prices to account for the VAT you will have to pay. VAT Notice 700/1 adds that once the number arrives, you should send VAT invoices to VAT-registered customers within 30 days.
  • Expect Making Tax Digital. GOV.UK says HMRC will sign up your business to Making Tax Digital for VAT unless it is exempt, so you will keep digital records and send returns through compatible software.
  • Expect returns and payments. A VAT return usually goes to HMRC every 3 months, according to 'How VAT works'. The standard rate is 20%, with 5% and 0% rates for some goods and services.
  • Check what you can reclaim. VAT Notice 700/1 says you may be able to reclaim VAT on goods bought for the business up to 4 years before your registration date that you still have, and on services up to 6 months before.

You should have registered months ago

This is the case that keeps people awake, and the answer is to deal with it now rather than later. GOV.UK says that if you register late, you must pay VAT on any sales you have made since the date you should have registered. Those sales have already happened at prices you set without VAT, so the VAT owed comes out of money you have already taken. The bill grows every month you wait.

On top of that, GOV.UK says you might have to pay a penalty, depending on how much you owe and how late your registration is. VAT Notice 700/1 says a late notification penalty could be equal to the amount of VAT you should have paid. Deliberately avoiding registration is treated far more seriously: the notice says HMRC may bring criminal proceedings. Its advice is to let HMRC know straight away, and registering now, with the correct earlier effective date, is how you do that. If the amounts are large or the dates are unclear, this is the point to get an accountant involved.

Voluntary registration under £90,000

GOV.UK says you can choose to register if your turnover is less than £90,000, and VAT Notice 700/1 adds that you may only register if you are in business, that you can register before you start making sales, and that you can choose the date your registration starts.

Whether it is worth it depends on who buys from you. Once registered, you charge VAT on your taxable sales, and HMRC usually repays the difference when the VAT you paid on business purchases is more than the VAT you charged. If your customers are VAT-registered businesses, they can usually reclaim the VAT you add, so registering can cost them little and let you reclaim VAT on your own costs. If your customers are members of the public buying crafts, classes or coaching, 20% VAT either goes on the price or comes off your margin, and you take on returns every period, even when nothing is owed. HMRC's free 'VAT Registration Estimator' on GOV.UK lets you model what registering might mean for your profits.

Digital products sold to EU customers follow a separate rule

The £90,000 threshold is about UK VAT. Selling digital services to consumers in the EU is a different set of rules. GOV.UK's guidance on digital services says the place of supply is where the consumer is located, and a UK business must either register for the non-Union VAT scheme in an EU member state or register for VAT in each EU country where it has customers. The guidance does not give a threshold below which this stops applying.

What counts matters here. GOV.UK lists e-books, downloadable PDFs sent automatically, stock photos and pre-recorded online courses as digital services. A PDF you email by hand, a live webinar, or a course that comes with support from a live tutor does not count. If you sell automated downloads to EU buyers, read that guidance before your sales there grow.

Prevent it next time: keep a running 12-month total

The rolling test only causes trouble when nobody is watching it. A few habits make sure you see the line coming.

  • At the end of every month, add up your taxable sales for the last 12 months across every channel, not just this tax year. That is the exact check VAT Notice 700/1 describes.
  • Pick a warning level, such as £80,000, and start preparing once you reach it: pricing with VAT in mind, software for Making Tax Digital, and a plan for whether you will register.
  • Before a big launch or a large order, ask whether the next 30 days alone could pass £90,000. That is the forward test, and its deadline is shorter.
  • If you are already registered and your turnover falls, GOV.UK says cancelling is optional once taxable turnover is under £88,000.

Keeping your takings in one place

The monthly check is easiest when your sales land in one account. You can sell from a free OneSol page through your own Stripe or PayPal account, so your online takings sit in that one account and adding up the last 12 months is a quick export rather than a hunt across platforms.

Selling from your bio?Sell from a free OneSol page through your own Stripe or PayPal account, so every sale lands in one account you can match against your records. Free plan included.Start free →

Still stuck? More fixes

Frequently asked questions

What is the UK VAT registration threshold?

£90,000 of VAT taxable turnover. GOV.UK says you must register if your total taxable turnover for the last 12 months goes over £90,000, or if you realise it is going to go over £90,000 in the next 30 days alone. The figure rose from £85,000 on 1 April 2024. Taxable turnover means the value of your sales, not your profit, and it includes zero-rated sales but not VAT exempt ones.

I went over the VAT threshold. How long do I have to register?

Under the 12-month test you have to register within 30 days of the end of the month in which you went over. GOV.UK's example: if your turnover for the last 12 months reaches £100,000 on 15 July, you must register by 30 August, and your effective date of registration is 1 September. From that effective date you owe VAT on your sales, so keep records from then even while you wait for your VAT number.

Is the VAT threshold based on the tax year or the last 12 months?

The last 12 months, on a rolling basis. VAT Notice 700/1 says you check, at the end of any month, the value of your taxable supplies in the previous 12 months. It is not the tax year, not the calendar year and not your accounting year. A seller who stays under £90,000 every April to April can still cross it in, say, the 12 months to November.

What happens if I register for VAT late?

GOV.UK says that if you register late you must pay VAT on any sales you have made since the date you should have registered, and you might have to pay a penalty depending on how much you owe and how late you are. VAT Notice 700/1 says a late notification penalty could be equal to the amount of VAT you should have paid, and that deliberately avoiding registration can lead to criminal proceedings. If you realise you are late, HMRC's advice is to tell them straight away.

Can I register for VAT voluntarily if I earn less than £90,000?

Yes. GOV.UK says you can choose to register if your turnover is under £90,000, which it calls voluntary registration, as long as you are in business. Once registered you must charge VAT on your taxable sales and send VAT returns, and you can usually reclaim the VAT you pay on business purchases. It tends to suit sellers whose customers are VAT-registered businesses, and to cost sellers whose customers are members of the public.

Do I have to charge VAT to EU customers for digital downloads?

That is a separate rule from the UK threshold. GOV.UK says that when you supply digital services, such as e-books, downloads or pre-recorded courses delivered automatically, to consumers in the EU, the place of supply is where the consumer is located. A UK business either registers for the non-Union VAT scheme in one EU member state or registers for VAT in each EU country where it has customers. Live webinars delivered by a person are not counted as digital services under these rules.

Written by

OneSol Team

Michael Carter writes the OneSol blog, which covers the problems small businesses and creators run into when they sell online: a link that has to hold everything, a checkout that pays the seller directly, a form that people actually finish.

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