Approaching the £90,000 VAT threshold? A practical guide for Bromley and Orpington businesses

Growing a business in Bromley, Orpington, Chislehurst or Swanley is something to be proud of. But as turnover climbs, one figure becomes very important: the £90,000 VAT registration threshold. Miss the point at which you cross it, and you could end up owing HMRC VAT you never charged your customers. Here's how the rules work and how to keep track without it taking over your evenings.

What the threshold is

You must register for VAT if your 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 alone. Below that level, registering is optional. This is known as voluntary registration.

The £90,000 figure has applied since 1 April 2024. The deregistration threshold is £88,000, so if you're registered and your taxable turnover drops below that, you can ask HMRC to cancel your registration.

VAT thresholds can change at a Budget, and the next one is on 28 October 2026. Check the current figure on GOV.UK, or ask us, before you rely on it.

It's a rolling 12 months, not your tax year

This is the part that catches people out. The test isn't based on your accounting year or the tax year. At the end of every month, you look back over the previous 12 months. If the total taxable turnover for that period is over £90,000, you've crossed the threshold.

A busy few months can tip you over even if your annual accounts showed less. Seasonal businesses are especially exposed, such as trades with a spring rush or retailers with a strong Christmas. So are sole traders who've just landed a big contract.

Deadlines once you go over

• Over the threshold in the last 12 months: register within 30 days of the end of the month in which you went over. Your registration takes effect from the first day of the second month after you went over. For example, if you crossed it during July, you'd register by 30 August and be registered from 1 September.
• Expecting to go over in the next 30 days alone: for example, because of a single large order. Register by the end of that 30-day period. In this case your registration takes effect from the date you realised, not a later date.

Late registration can mean paying the VAT you should have charged from the correct date, out of your own pocket, plus possible penalties. Keeping an eye on your figures is far cheaper.

What counts as taxable turnover?

Taxable turnover is the total value of everything you sell that isn't exempt from VAT, including zero-rated items. It's your sales, not your profit. Exempt supplies, such as most insurance and some financial and health services, don't count. If you only make exempt supplies, you don't need to register at all.

Should you register voluntarily?

Sometimes registering early makes sense. If most of your customers are VAT-registered businesses, they can usually reclaim the VAT you charge them, so your prices don't really go up for them. You can also reclaim VAT on your own business costs. If your customers are mainly members of the public in and around Bromley, adding 20% VAT (or absorbing it) is a much bigger decision. We'll help you weigh it up.

Once you're registered: VAT is digital

All VAT-registered businesses have to follow Making Tax Digital for VAT. That means keeping digital records and filing returns through compatible software. We work with Xero and other cloud packages every day, so we can get your VAT set up correctly from the start. That includes the right VAT scheme, which might be the standard scheme, the Flat Rate Scheme or cash accounting, depending on your business.

A simple way to stay on top of it

• Run a rolling 12-month sales report at each month end. Most cloud accounting software can do this in a few clicks.
• Set your own warning level, say £80,000, so you have time to plan.
• Think ahead about pricing, invoices and software before you need to register.

Frequently asked questions

I'm a sole trader with two businesses. Do I count them separately?

No. VAT registration applies to you as a person, so the turnover from all your sole trader activities is added together. A limited company is a separate legal person and is tested on its own.

Can I stay below the threshold by pausing work?

Some businesses do manage their turnover, but be careful. Artificially splitting one business into several to avoid VAT can be challenged by HMRC. Talk to us before restructuring anything.

What happens if I realise I should have registered months ago?

Contact HMRC, or an accountant, as soon as possible. Putting it right quickly usually reduces penalties, and we can help you work out what's owed.

Get VAT right first time

Muftals is a chartered accountancy firm in Chislehurst, and our team holds ACCA and CIMA qualifications. We help businesses across the BR postcodes with VAT registration and returns, cloud bookkeeping and Making Tax Digital. Book a free first call on 020 7078 7546 (Monday to Friday, 9am to 5:30pm) or send us a message.

Figures correct as at 20 October 2026. This is general information, not personal advice.