When a tradesperson has to register for VAT: the rolling 12 months, worked through

Plenty of tradespeople think the VAT limit is about the tax year, so they wait for April to see where they stand. It is not. The test is a rolling 12 months, checked at the end of every month, and a firm can cross it in October and have no idea. This guide runs one invented firm through the test so you can see exactly where the line falls.

What the rule says

GOV.UK says you must register if your total taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days. Two dates matter once you cross.

• You must register within 30 days of the end of the month in which you went over.
• Your VAT start date is the first day of the second month after you went over.

"Taxable turnover" is what you charge for work that carries VAT at any rate, including zero-rated work. It is not profit, and it is not what you were paid in the period. It is what you invoiced.

The test we ran

We made up a small firm and gave it 15 months of invoiced turnover. A good spring and summer, a quieter winter, then a strong second spring. Monthly figures, in pounds, from January in year one: 5,200; 6,100; 6,800; 7,400; 8,200; 9,100; 9,600; 8,800; 8,200; 7,600; 6,900; 7,000; 8,300; 9,400; 10,200.

At the end of each month from the twelfth onwards we added up the latest 12 months and compared the total with £90,000. Here is what came out.

The firm went over at the end of December, by £900. Nothing in the diary said so. Annual turnover for the calendar year looked like a number just above the line, and a firm that only checked at the tax year end in April would have found it had crossed four months earlier.

Using the GOV.UK dates, this firm had to register by 30 January and its VAT start date was 1 February. Any invoice it raised from 1 February needed VAT on it. If it registers late, the VAT it should have charged is still owed to HMRC, and it will have to find that money out of its own pocket, since the customers were never charged it.

The 30-day look-ahead

The second trigger catches the very big job. It looks at the next 30 days on their own: if the taxable sales of that period alone will go over £90,000, the firm registers by the end of the 30 days and the start date is the day it realised, not a month later. GOV.UK's example is a £100,000 contract arranged on 1 May and paid by the end of the month.

A smaller job does not set this test off. Say the firm above was at £84,000 for the last 12 months and has just been awarded a £12,000 extension. £12,000 in 30 days is nowhere near £90,000, so the look-ahead does not apply. The first test does: once the extension is invoiced, the rolling 12 months stand at £96,000 unless an older month drops out, and the firm must register within 30 days of the end of that month. Check both tests every time a large job is confirmed.

What it changes in practice

Once registered, your prices to private customers effectively go up by a fifth unless you absorb it, and you can reclaim the VAT on your materials and van costs. Which side of that comes out ahead depends on who your customers are: a firm working mostly for VAT-registered businesses barely notices, while one working mostly for homeowners feels it. Some work is zero-rated or reduced-rate, and some building work for businesses is covered by a special rule called the domestic reverse charge. Your accountant should confirm how those apply to your jobs.

A way to keep watch

The sum above is easy once. The trouble is somebody has to do it every month, from your own invoices, and nobody does. A simple routine is to take your invoice list on the first working day of each month, add up the last 12 months of taxable turnover, and write the figure and the headroom on one line in a note. If the headroom is under £15,000, tell your accountant that month.

Doing that every month is the kind of repeat chore a Paperwork Clerk takes on. See the box below for how we set one up. Late payment interest on the invoices you chase is a separate sum; we worked it through in what late payment interest a builder can claim, and the CIS deadline that lands on the 19th each month is covered in the CIS monthly return guide.

What we did not test

Our firm is invented, and we have not tested this against a real VAT account or a real HMRC registration. The threshold and dates come from GOV.UK as read on 1 October 2026. Thresholds change in the Budget, so check the GOV.UK page before you act on any figure here.