VAT Registration Threshold UK 2026: When to Register, How, and What Happens If You Don't

VAT registration is one of those things tradespeople put off until they have to deal with it. Then they panic-register, miss the deadline, or realise they've been charging VAT when they shouldn't have.

Here's the clear version.

When do you have to register?

You must register for VAT if, in any rolling 12-month period, your taxable turnover (gross income from VAT-able work) goes over £90,000.

Note: it's not calendar year — it's any 12-month period. So if your turnover was:

• Apr 2025 – Mar 2026: £85,000
• May 2025 – Apr 2026: £92,000

You're over the threshold and must register.

What counts as "taxable turnover"?

Almost everything you do as a tradesperson. Building work, plumbing, electrical, decorating, groundworks, maintenance — all VAT-able at the standard rate (20%) or zero rate (new build).

A few exceptions:

• Goods exported — usually zero-rated
• Some training or education — may be exempt

If you're not sure, gov.uk has the full list.

How to register

You register online through HMRC. It's free and takes about 5–10 minutes:

1. Go to gov.uk/vat-registration.
2. Sign in with your Government Gateway user ID (or make one).
3. Fill in your business details, turnover, and bank info.
4. Submit. HMRC usually processes within 7–10 working days.

You'll get a VAT number and a certificate. From your effective date of registration (which is usually the start of the month after you crossed the threshold, sometimes earlier), you must:

• Charge VAT on all your invoices.
• File VAT returns quarterly via MTD-compatible software.
• Pay any VAT owed to HMRC by the deadline.

The deadline trap

You have 30 days from the end of the month you crossed the threshold to register. So if you crossed £90,000 in March 2026, you must register by 30 April 2026.

If you miss the deadline, HMRC can:

• Make your registration date backdated to when you should have registered, meaning you owe VAT you didn't charge.
• Charge you a penalty (typically 5–15% of the VAT due for the missed period).
• Charge interest on top.

The penalties get worse the longer you wait, so don't.

What it costs in time and money

Time: A sole trader with GraftLog spends about 30 minutes a quarter on VAT. You generate the quarterly summary, check it, submit it, and pay.

Money: If you register voluntarily (before hitting the threshold), you can reclaim VAT on business purchases — tools, materials, van, fuel. This often makes voluntary registration worthwhile for tradespeople with significant material costs.

Accountant: If you'd rather not do it yourself, a sole trader VAT return costs £100–£250/quarter from an accountant. That's £400–£1,000/year.

How to charge VAT on your invoices

Once registered, every invoice you issue must:

1. Display your VAT number.
2. Show the VAT amount separately.
3. Show the total including VAT.

Bad invoice after VAT registration:

Living room rewire — £1,200

Good invoice:

Living room rewire — £1,000.00
VAT (20%) — £200.00
Total due — £1,200.00

GraftLog automatically calculates and displays VAT on every quote and invoice when your profile is set as VAT-registered. No manual maths.

Should you register voluntarily?

It depends on your material costs. Quick rule of thumb:

• High material costs (building, kitchen fitting, plumbing): register voluntarily. You'll likely reclaim more VAT than you charge customers extra.
• Low material costs (decorating, handyman, small electrical): probably not worth it. Your prices will go up 20% (because you add VAT), which can lose you jobs.

The bottom line

Know your rolling 12-month turnover. The moment it crosses £85,000, start preparing to register. Don't let it creep past £90,000 without registering.

GraftLog tracks your rolling turnover and reminds you when you're approaching the VAT threshold. Start free →