When a sole trader has to register for VAT.

The VAT calculator adds and removes the three rates, and it runs both registration tests. The thresholds do not follow the 6 April tax year. They are the figures GOV.UK publishes now. VAT Notice 700/1's history lists £90,000 through 31 March 2026 and has not printed a later row; the live threshold pages still say £90,000 to register and £88,000 before you can ask to cancel.

Taxable turnover is not profit

Add up the value of everything you supply that is not exempt, for a rolling 12 months, not for the tax year and not after expenses. A quiet January does not reset the clock if the previous February was busy. Zero-rated sales, such as most food and children's clothes, are taxable at 0% and they still count towards the threshold. Exempt supplies, such as many financial and insurance services, do not count.

The rates you would then charge are:

• Standard rate, 20%: Most goods and services.
• Reduced rate, 5%: Some goods and services, such as home energy and children's car seats.
• Zero rate, 0%: Zero-rated supplies, such as most food and children's clothes.

The right rate depends on what you sell. The VAT rates guide is the index; the detailed list of goods and services is a separate GOV.UK tool. Charging 20% on something that is zero-rated is a good way to annoy a customer and still owe HMRC the amount you should not have added.

Two ways the obligation starts

The rolling test is the common one. GOV.UK's example: on 15 July your taxable turnover for the last 12 months is £100,000, and that is the first time it has gone over. You must register by 30 August. The effective date is 1 September. In general that is 30 days after the end of the month you crossed the line, and the effective date is the first day of the second month after that month. The calculator will apply the rule to a date you enter. It will not invent a date you have not given.

The other test is forward-looking. If you realise that taxable turnover in the next 30 days, on its own, will go over £90,000, you register by the end of that 30-day period. The effective date is the day you realised, not the day the money arrives. This is usually a contract you have already agreed, not a hope that the year might be good.

You must also register, whatever the turnover, if you and the business are based outside the UK and you supply goods or services here. That rule is for non-established taxable persons, and the notice is the right place for it. This guide assumes a sole trader established in the UK.

Registering because you want to

Under the threshold you can register voluntarily. The usual reasons are practical: your customers are VAT-registered businesses that can reclaim the VAT you charge, or you want to reclaim VAT on what you buy. The cost is the admin, and the price rise if your customers are ordinary people who cannot reclaim it. A £100 net price becomes £120 at the standard rate. Voluntary registration is a commercial decision. The calculator can show the VAT. It cannot tell you whether your customers will wear it.

Cancelling later

If taxable turnover falls below £88,000 you can ask HMRC to cancel. You do not have to. The gap between £88,000 and £90,000 is deliberate, so a business hovering around the line is not registering and cancelling every month. Exactly £88,000 is not "below" it. Some businesses based outside the UK cannot use this turnover test at all.

You must cancel, within 30 days, if you stop trading or stop making taxable supplies, or you may be charged a penalty. That is a different rule from the optional turnover cancellation.

What registration commits you to

You charge the right rate, you keep records of VAT you pay other businesses, you account for VAT on imports, and you send a return, usually every three months, of VAT charged to customers and VAT paid out. If you have charged more than you have paid, you pay HMRC the difference. If you have paid more than you have charged, HMRC usually repays it. There are schemes that change the arithmetic. They are optional and they have their own thresholds; they are not covered here.

VAT record-keeping has its own digital rules, separate from Making Tax Digital for Income Tax. Read the VAT guidance when you register rather than assuming the income-tax programme covers the VAT return. The two can both apply to the same person, for different reasons.