What is the VAT threshold for a sole trader?

It is the same for a sole trader, a partnership and a limited company. GOV.UK gives it as £90,000 of VAT taxable turnover. You must register if your taxable turnover for the last 12 months goes over it, or you expect it to go over it in the next 30 days.

Does VAT turnover include materials I buy and charge on?

GOV.UK defines taxable turnover as the total value of everything you sell that is not VAT exempt or out of scope. Materials you sell on to a customer are part of what you sell, so they count. Check your own case with your accountant.

Is it profit or turnover that counts towards the limit?

Turnover. GOV.UK talks about the total value of what you sell, not what is left after costs. A year with a low profit can still put you over the limit.

Can I register for VAT before I reach the threshold?

Yes. GOV.UK calls this voluntary registration and says you can do it if your turnover is below £90,000. Once registered you charge VAT and send VAT returns, so weigh that up first.

What happens if I register late?

GOV.UK says you must pay VAT on any sales you made since the date you should have registered. You may also face a penalty, depending on the amount owed and how late you are.

PRACTICAL GUIDES

VAT registration threshold: when a tradesman has to register

The £90,000 VAT threshold, the two tests, and a worked example for a floor fitter.

By Tea Break Tools

Published 11 November 2026 · Last updated 11 November 2026 · 5 min read

General information, not tax or legal advice. Rules change. Check GOV.UK and ask your accountant.

You must register for VAT when your taxable turnover goes over £90,000. That is the figure GOV.UK shows today (11 November 2026). It is turnover, not profit. This is general information, so check with your accountant before you decide anything.

The two tests

GOV.UK gives you two tests. Meet either one and you must register for VAT.

The last 12 months. Add up your taxable turnover for the last 12 months. If it is over £90,000, you must register. This is a rolling total, not a tax year. You check it at the end of every month.
The next 30 days. If you realise you are going to go over £90,000 in the next 30 days, you must register. A single big job you have just won is the usual cause.

What counts towards the limit

GOV.UK says taxable turnover is the total value of everything you sell that is not VAT exempt or "out of scope". That is turnover, not profit. Your costs do not come off it.

For a fitter, that means the whole value of the job. If you buy underlay and adhesive and sell them on to the customer, they are part of what you sell, so they are in the total. A £3,000 job with £1,200 of materials adds £3,000, not £1,800.

Worked example: a floor fitter

Say a fitter's rolling 12 month total was £84,000 at the end of March. Each month, add the new month and take off the same month from a year ago. These figures are made up to show the method.

Month end	Added this month	Dropped (same month last year)	Rolling 12 month total
March			£84,000
April	£8,200	£6,000	£86,200
May	£8,600	£6,200	£88,600
June	£9,000	£6,400	£91,200
July	£9,400	£6,600	£94,000

June is the month the total goes over £90,000. Now use GOV.UK's rule for the dates:

Register by 30 July. You must register within 30 days of the end of the month you went over.
Registered from 1 August. GOV.UK says the effective date is the first day of the second month after you go over the threshold.

The next 30 days test works differently. GOV.UK says you are registered from the date you realised, and you must register by the end of that 30 day period.

What changes once you are registered

You charge VAT. The standard rate is 20% (GOV.UK, VAT rates). A £1,000 job becomes £1,000 plus £200 VAT, so £1,200.
You reclaim VAT on business purchases. GOV.UK says your net VAT is usually the VAT you charged minus the VAT you paid other businesses. Keep records of what you pay.
You send VAT returns. Usually every 3 months, according to GOV.UK.

Put the VAT line on your quotes from the first day. The day rate calculator has a VAT switch, and the quote template has a VAT line.

Two things to look up, with one link each. The Flat Rate Scheme is an alternative way to work out what you pay. The domestic reverse charge can change how you invoice VAT registered contractors under CIS.

Registering voluntarily

GOV.UK says you can register even if you are under £90,000. Whether you should depends on who pays you.

If your customers are homeowners

For: you can reclaim VAT on tools and materials you buy for the business.
Against: a homeowner cannot reclaim VAT. A £1,000 job costs them £1,200, or you take the £200 out of your own price. You also take on the returns.

If your customers are VAT registered builders

For: the builder can usually reclaim the VAT you charge, so it costs them little. You reclaim your own purchases too.
Against: the returns and record keeping still land on you, and a small gain on purchases may not be worth them.

Coming off the register

GOV.UK sets the cancellation threshold at less than £88,000 of VAT taxable turnover. See the VAT thresholds page for the exact wording.

If you register late

GOV.UK says you must pay VAT on any sales you made since the date you should have registered. You may also have to pay a penalty, depending on how much you owe and how late you are. GOV.UK gives no penalty figures on that page, so none are quoted here.

That is why the month-end check matters.