VAT registration checklist for tradespeople: what to do when you cross £90,000

Crossing the VAT threshold is a job with a clock on it. From the end of the month your last 12 months of taxable turnover went over £90,000, you have 30 days to register, and VAT is owed on your sales from a fixed start date whether or not your VAT number has arrived. This list takes a sole trader or small trades firm through it in order: confirming the date, registering, what to charge while you wait, the first VAT invoices and the first return. Use it the month your running total gets close, and again the month it goes over.

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VAT registration checklist for tradespeople

Tick each step as it is done. The ticks are kept in this browser only, so you can come back to the list; nothing is sent anywhere.

Confirm the date you went over

Add up your taxable turnover for the last 12 months at the end of every month Count zero-rated work, such as a new-build house, in the total Write down the month you went over, the date to register by and your VAT start date One contract worth over £90,000 in the next 30 days: register by the end of those 30 days If the rise was a one-off, ask HMRC for a registration exception before the deadline

Register and choose how you will account

Gather your National Insurance number, an identity document, bank details and turnover figures Register online with HMRC inside the 30 days Ask your accountant whether the Flat Rate Scheme suits your mix of labour and materials Consider the Cash Accounting Scheme if your customers pay slowly Check your accounts software plan can file a VAT return, and price the next plan up

While you wait for the VAT number

Raise your prices by the VAT from your start date, but do not show VAT on invoices yet Householders: quote the full price including VAT, and say why it has gone up Reissue each of those invoices showing the VAT once the number arrives Keep paper records until HMRC confirms the registration, then switch on the software

Your first VAT invoices

Put your VAT number, the VAT rate and the amount before VAT on every invoice Invoicing a VAT-registered contractor under CIS: use the reverse charge, not a VAT charge New-build house: show VAT at 0% and leave the reverse charge wording off Take VAT out of a total by dividing by six, not by taking 20% off

Reclaiming VAT and the first return

List the tools, van and stock you bought in the last 4 years and still have Ask the merchant for a VAT invoice on every purchase from now on Diary each VAT return and payment for one calendar month and 7 days after the period ends Keep VAT records, and a copy of every invoice you issue, for at least 6 years Tell HMRC within 30 days if your business name, trading name or main address changes

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A working list, not a certificate and not advice: the rule behind each step, with its source, is set out below.

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Confirm the date you went over

Add up your taxable turnover for the last 12 months at the end of every month. The test is a rolling 12 months, not the tax year. In our worked example an invented firm went over by £900 at the end of December, and a check at the April year end would have found it four months late. Source: GOV.UK, Register for VAT: when to register, read 1 October 2026. The working is in When a tradesperson has to register for VAT.

Count zero-rated work, such as a new-build house, in the total. GOV.UK says taxable turnover is everything you sell that is not exempt or out of scope, and lists zero-rated and reduced-rated sales with standard-rated ones. Work you invoiced at 0% still counts towards the £90,000. Source: GOV.UK, Register for VAT: calculate your turnover, read 1 October 2026. The working is in New-build house at 0% VAT.

Write down the month you went over, the date to register by and your VAT start date. You must register within 30 days of the end of the month you went over, and VAT starts on the first day of the second month after. GOV.UK's example: over on 15 July, register by 30 August, start date 1 September. Source: GOV.UK, Register for VAT: when to register, read 1 October 2026. The working is in When a tradesperson has to register for VAT.

One contract worth over £90,000 in the next 30 days: register by the end of those 30 days. The second test looks at the next 30 days on their own. If your taxable sales in that period alone will go over £90,000, your start date is the day you realised, not a later month. Source: Value Added Tax Act 1994, Schedule 1, paragraph 1(1)(b); GOV.UK, Register for VAT, read 1 October 2026.

If the rise was a one-off, ask HMRC for a registration exception before the deadline. You can apply for an exception if your taxable turnover went over the threshold only temporarily. The application goes by post on form VAT1. HMRC writes to say whether you have it, and registers you if not. Source: GOV.UK, Register for VAT: if you go over the threshold temporarily, read 1 October 2026.

Register and choose how you will account

Gather your National Insurance number, an identity document, bank details and turnover figures. For an individual or partnership GOV.UK lists a National Insurance number, a passport or driving licence, bank account details, a UTR if you have one, your annual turnover and an estimate of taxable turnover for the next 12 months. Source: GOV.UK, Register for VAT: how to register, read 1 October 2026.

Register online with HMRC inside the 30 days. Register late and you must still pay VAT on every sale since the date you should have registered, and a penalty may be added. Your customers were never charged that VAT, so it comes out of your own pocket. Source: GOV.UK, Register for VAT: late registration, read 1 October 2026. The working is in When a tradesperson has to register for VAT.

Ask your accountant whether the Flat Rate Scheme suits your mix of labour and materials. It is open at £150,000 of VAT turnover or less. You pay 9.5% of VAT-inclusive turnover for general building, 14.5% for labour-only work or 16.5% as a limited cost business, less 1% in your first year, and cannot reclaim VAT on most purchases. Source: GOV.UK, VAT Flat Rate Scheme, read 1 October 2026.

Consider the Cash Accounting Scheme if your customers pay slowly. On standard accounting you pay HMRC the VAT on an invoice even if it has not been paid. On cash accounting you pay when the customer pays you. Your VAT taxable turnover must be £1.35 million or less. Source: GOV.UK, VAT Cash Accounting Scheme, read 1 October 2026. The working is in What late payment interest can a builder actually claim? Worked sums.

Check your accounts software plan can file a VAT return, and price the next plan up. The cheapest sole-trader plans drop out once you need VAT returns. Read on 1 October 2026, Xero Simple at £7 a month is sold for businesses not registered for VAT, and Ignite at £18 is the first Xero plan with VAT returns. Source: Xero pricing page, read 1 October 2026, in our software cost guide. The working is in Xero vs QuickBooks vs FreeAgent for a sole-trader tradesperson.

While you wait for the VAT number

Raise your prices by the VAT from your start date, but do not show VAT on invoices yet. GOV.UK says you cannot include VAT on invoices until you have your VAT number, but you owe HMRC the VAT on invoices raised from your start date. You may increase your prices to cover it. Source: GOV.UK, Register for VAT: accounting for VAT while you wait, read 1 October 2026.

Householders: quote the full price including VAT, and say why it has gone up. A householder cannot reclaim VAT, so the price including VAT is the price they pay. A £1,000 job becomes £1,200 at 20%. Quotes already accepted at the old price are the ones where the VAT comes out of your margin. Source: our VAT calculator guide; GOV.UK, Register for VAT, read 1 October 2026. The working is in VAT calculator.

Reissue each of those invoices showing the VAT once the number arrives. GOV.UK says to reissue the invoice showing the full amount including VAT after you get your number. The customer pays nothing more, and a VAT-registered customer can then reclaim the VAT on their next return. Source: GOV.UK, Register for VAT: accounting for VAT while you wait, read 1 October 2026.

Keep paper records until HMRC confirms the registration, then switch on the software. HMRC signs a newly registered business up to Making Tax Digital for VAT unless it is exempt. GOV.UK says to wait for HMRC to confirm your registration before downloading compatible software, and to keep paper records while you wait. Source: GOV.UK, Charge, reclaim and record VAT: keeping VAT records, read 1 October 2026.

Your first VAT invoices

Put your VAT number, the VAT rate and the amount before VAT on every invoice. A VAT invoice needs your VAT number, the rate and the amount before VAT for each line, and the total VAT in pounds. A simpler version is allowed for sales under £250 including VAT, which few trade jobs are. Source: GOV.UK, Register for VAT: after you register; HMRC VAT invoice rules in our invoice guide. The working is in Free invoice template for electricians and builders (UK), with CIS and reverse charge.

Invoicing a VAT-registered contractor under CIS: use the reverse charge, not a VAT charge. The invoice shows the VAT due and says the reverse charge applies, and the contractor accounts for the VAT. HMRC's suggested wording is "Customer to pay the VAT to HMRC". It does not apply to an end user who has told you so in writing, or to householders. Source: HMRC, VAT reverse charge technical guide. The working is in CIS deduction calculator.

New-build house: show VAT at 0% and leave the reverse charge wording off. Labour and building materials on a new dwelling are zero-rated, and the reverse charge covers only standard and reduced rate work. CIS is still deducted from the labour: on our example invoice £800 comes off £4,000. Source: HMRC, VAT Notice 708; VAT reverse charge technical guide. The working is in New-build house at 0% VAT.

Take VAT out of a total by dividing by six, not by taking 20% off. A £1,200 total at 20% holds £200 of VAT, one sixth, not £240. Using 20% of the total overstates the VAT by £40 on every £1,200, and on a purchase that is an overclaim HMRC will want back. Source: HMRC VAT fraction, in our VAT calculator guide. The working is in VAT calculator.

Reclaiming VAT and the first return

List the tools, van and stock you bought in the last 4 years and still have. You can reclaim VAT on goods bought up to 4 years before registration if you still have them, and on services bought in the 6 months before. They must be for the business now registered, and you need valid VAT invoices. Source: GOV.UK, Charge, reclaim and record VAT: purchases made before registration, read 1 October 2026.

Ask the merchant for a VAT invoice on every purchase from now on. GOV.UK says you cannot reclaim VAT using an invalid invoice, a pro-forma invoice, a statement or a delivery note. A card statement does not count either, and most merchants will email a VAT invoice for a trade account. Source: GOV.UK, Charge, reclaim and record VAT: VAT invoices, read 1 October 2026. The working is in VAT calculator.

Diary each VAT return and payment for one calendar month and 7 days after the period ends. That is the usual deadline for both the return and the money reaching HMRC, and the return must go in through compatible software. Each late return earns a penalty point, and reaching the points threshold brings a £200 penalty. Source: GOV.UK, Send a VAT Return: deadlines and late returns, read 1 October 2026.

Keep VAT records, and a copy of every invoice you issue, for at least 6 years. GOV.UK says to keep VAT records for at least 6 years, with copies of all the sales invoices you issue, even ones you cancel or produce by mistake, and every purchase invoice. Source: GOV.UK, Charge, reclaim and record VAT: keeping VAT records, read 1 October 2026.

Tell HMRC within 30 days if your business name, trading name or main address changes. You must keep your VAT registration details up to date. GOV.UK gives 30 days to report a change to the name, trading name or main address of the business, and a penalty is possible if you miss it. Source: GOV.UK, Register for VAT: changing your VAT details, read 1 October 2026.

How to use the list

Keep the ticked list, dated, with your VAT registration certificate and the note of the day you went over the threshold. If HMRC later asks when you became liable, that note and your monthly turnover totals are the answer. Steps that do not apply to your work, such as the reverse charge if you never work for contractors, can be ticked once you have decided they do not apply. Go through the last group again before your second return, because that is when the routine has to stand without a list.

A ticked list is a record that the steps were done, not proof that each was done properly. The list covers the points our guides and the official pages named above set out; it is not every duty a firm has. This page is general information, not legal advice.

Overlyft sets up AI assistants for trades and building firms: they prepare drafts for a person to approve. They do not tick off any of these steps for you, and you can do every one without them.