The VAT Threshold: A Monthly Check So It Never Catches You Out
A small business has a great autumn. Orders keep coming, and the owner is pleased. Then someone mentions VAT, and the question lands: when exactly do we have to register?
It is a good problem to have, but the rule has a hard edge. Here is what GOV.UK says, and a simple way to keep an eye on it.
The two numbers
- Registering: you must register for VAT if your taxable turnover goes over £90,000 (or you expect it to).
- Deregistering: if you are VAT-registered, you can choose to cancel your registration when taxable turnover falls below £88,000.
What counts as taxable turnover
GOV.UK defines it as the total value of everything you sell or supply that is not exempt. It is about what you sell, not what you keep after costs. The page sends you to separate guidance on when exactly to register, so read that before deciding anything.
A five-minute monthly check
- On the first day of each month, add up your taxable sales for the period that the GOV.UK guidance on when to register tells you to use.
- Take out anything exempt from VAT, if you sell something that is.
- Write down how far you are from £90,000.
- If a large order is coming, ask your accountant what it would mean before accepting it.
- Keep the figures in one place so the number is ready when you need it.
How the period is counted is set out in that separate guidance, so check it for your case or ask your accountant.
Where Edwin fits
Edwin, a digital assistant, can remind you on the day you choose each month and send a weekly recap in the weeks before a decision. He does not work out your VAT position or give tax advice. He always says he is an AI, and nothing goes out without your approval.