UK VAT: registration and deregistration thresholds
VAT registration uses taxable turnover rather than profit. The test for compulsory registration and the lower threshold for requesting cancellation serve different purposes, and cancellation requires HMRC confirmation.
- Registration threshold
- Taxable turnover over £90,000 in the last 12 months or expected in the next 30 days.
- Deregistration threshold
- Taxable turnover below £88,000 permits a cancellation request, subject to conditions.HMRC, Cancel VAT registration
The compulsory registration tests
HMRC’s registration guidance states that registration is required when total taxable turnover for the last 12 months goes over £90,000, or when taxable turnover is expected to go over £90,000 in the next 30 days. These are rolling and forward-looking tests, not an annual profit threshold. HMRC, Register for VAT (opens in a new tab).
Taxable turnover is the value of sales that are not VAT-exempt or out of scope. It includes zero-rated, reduced-rated and standard-rated supplies. Businesses based outside the UK supplying the UK can face registration regardless of turnover; Northern Ireland acquisitions and business takeovers have additional rules. HMRC, Register for VAT (opens in a new tab).
Registration below the compulsory threshold is possible as voluntary registration. Being below the threshold is not proof that an existing registration has ended. HMRC, Register for VAT (opens in a new tab).
The lower cancellation threshold
Where taxable turnover falls below £88,000, a business can ask HMRC to cancel VAT registration. GOV.UK states that the exception does not apply where the owner and business are based outside the UK and supply goods or services to the UK, or expect to do so in the next 30 days. HMRC, Cancel VAT registration (opens in a new tab).
Falling below the threshold does not itself cancel registration. HMRC confirms the official cancellation date. A final VAT Return is required for the period up to and including that date, and stock or assets may give rise to VAT on cancellation. HMRC, Cancel VAT registration (opens in a new tab).
Timing and scope
Under the historical-turnover test, registration is required within 30 days of the end of the month in which turnover exceeded the threshold. Under the forward test, registration is required by the end of that 30-day period. The published guidance gives different effective-date rules for these tests. HMRC, Register for VAT (opens in a new tab).
This is general information adapted from HMRC material under the Open Government Licence v3.0, without endorsement. No matching UK VAT calculator or worked VAT calculation is available here. This page does not classify supplies, settle an exception request or recommend voluntary registration or cancellation. HMRC, Register for VAT (opens in a new tab).