When should a new business register for VAT?
Answered 17 March 2026
Here is a comprehensive answer on when a new business should register for VAT:
When Should a New Business Register for VAT?
What the law says
The VAT registration threshold is set out in Schedule 1, paragraph 1 of the Value Added Tax Act 1994 and is amended by statutory instrument (usually annually). A trader whose taxable turnover does not exceed this threshold does not need to register, but may do so voluntarily if they wish.
There are two tests that trigger a liability to register:
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The "backward look" (historic test): If a trader's taxable turnover over the last 12 months exceeds the registration threshold, they must notify HMRC within 30 days of the end of the relevant month (VATA 1994, Schedule 1, paragraphs 1(1), 5 and 6).
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The "forward look" (future test): If a trader expects their taxable turnover to exceed the registration threshold in the next 30 days, they must notify HMRC within 30 days of the date they first expected to exceed the limit.
Failure to notify within these time limits results in a Failure to Notify penalty (under Schedule 41, Finance Act 2008 for obligations arising on or after 1 April 2010).
HMRC guidance / practice
Mandatory registration applies when the total value of taxable supplies, distance sales, or relevant acquisitions goes over the current registration thresholds. The current threshold for UK sellers is £90,000 per year in VAT taxable turnover.
Special rules apply in certain situations:
- Overseas sellers must register if they sell goods located in Northern Ireland at the point of sale, or if their total sales to customers in Northern Ireland exceed £70,000 per year.
- Non-UK established businesses must register if they make any taxable supplies in the UK.
- Exempt income does not count towards the registration threshold. A business does not need to register if it only exceeds the threshold due to the occasional disposal of a business asset.
Voluntary registration is available for businesses trading below the threshold, provided HMRC is satisfied that the business makes or intends to make taxable supplies.
For further detail, HMRC directs businesses to VAT Notice 700/1: Who should register for VAT.
Summary table:
| Trigger | Action required | Deadline |
|---|---|---|
| Last 12 months' taxable turnover exceeds £90,000 | Notify HMRC and register | Within 30 days of end of the relevant month |
| Reasonable grounds to believe turnover will exceed £90,000 in the next 30 days | Notify HMRC and register | Within 30 days of first expecting to exceed the limit |
| Non-UK business making any taxable supplies in the UK | Register immediately | No threshold applies |
Citation sources
Belated Notification Penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 of the Finance Act 2008. The Failure to Notify penalty applies to obligations to notify HMRC of a liability to be registered for VAT on or after 01/04/2010. The Belated Notification Penalty under Section 67 VATA 1994 continues to apply to obligations to notify a liability to be registered for VAT before 01/04/2010. Please see the Compliance Handbook CH70000 for more details about the new fa
A trader whose taxable turnover does not exceed a specified registration threshold (`the VAT registration threshold’) does not need to register as a taxable person but may do so if they wish. However, if the trader wishes to register they must satisfy HMRC that they make or intend to make taxable supplies in the course or furtherance their business. The VAT registration threshold is subject to alteration. It is prescribed in Sch1 para1 Value Added Tax Act 1994 and is amended by statutory instrum
You’ll need to register only if the turnover from all your taxable business activities reaches the VAT registration threshold. Exempt income does not count towards the threshold. You do not need to register if you only go over the threshold because of the occasional disposal of a business asset.
If you’re in business, you must register for VAT when the total value of any of your taxable supplies, distance sales or relevant acquisitions goes over the current registration thresholds. You may also register for VAT voluntarily if you’re trading below these thresholds. If your business is not established in the UK, you’ll have to register for VAT if you make any taxable supplies here. There’s a VAT registration guide but if your circumstances are not covered or you need more information, rea
You must register for VAT in the UK if you’re: a UK seller selling goods as a business activity in the UK, and your business’s VAT taxable turnover is more than £90,000 a year an overseas seller and the online marketplace provides you with the VAT details of a business customer an overseas seller selling goods located in Northern Ireland at the point of sale, and sold to customers in Northern Ireland an overseas seller with goods stored in the EU and your total sales to customers in Northern Ire