Should you register for VAT?

Current VAT thresholds, checked 6 November 2026

The GOV.UK VAT registration page says you must register if your taxable turnover over the last 12 months is above £90,000, or you expect it to pass that level in the next 30 days. The GOV.UK VAT thresholds page, whose metadata shows an update on 30 September 2026, lists the same registration figure alongside the deregistration and Flat Rate Scheme limits.

The thresholds change from time to time, so check the GOV.UK thresholds page before acting. This is general information and not tax advice; where a decision depends on it, speak to HMRC or an accountant.

What counts towards your turnover

VAT turnover is not profit. VAT Notice 700/1, which GOV.UK last updated on 5 August 2026, defines taxable turnover as the total value of all taxable supplies made in the UK or Isle of Man, including zero-rated supplies. It excludes exempt supplies and sales of capital assets such as equipment or vehicles.

• Standard-rated and reduced-rated sales count.
• Zero-rated sales count, even though you charge no VAT on them.
• Exempt sales do not count.
• Selling off kit such as a gazebo or a van is excluded from taxable turnover, as a capital asset sale.

ByteStart adds that if you run more than one business as a sole trader, HMRC normally combines the turnover. Treat that as a prompt to ask HMRC if you trade in more than one name.

How event sales count

Notice 700/1 sets one test based on the total of your taxable supplies. It does not carve out events, markets or particular pitches, and the sections read for this guide do not address trading locations separately. In practice that means the VAT test looks at everything the business sells in the period: sales at every market and festival, online orders and any other channel.

Because the check is rolling, a seasonal trader can pass the threshold without a single high-turnover month. Take the illustration below, which uses round numbers only.

This trader would be over £90,000 on a rolling 12-month view and would need to register, even though no single event brought in a large sum. If you are unsure how a particular income stream is treated, ask HMRC's VAT helpline.

Hot food, cold food and other sales

Whether a sale carries VAT depends on what is sold. VAT Notice 709/1, updated by HMRC on 8 June 2026, says hot takeaway food is standard-rated if it is hot when handed over and meets at least one of five tests: it was heated so it could be eaten hot, heated to order, kept hot after heating, sold in heat-retaining packaging or advertised as hot. Cold takeaway food is generally zero-rated, except for always-standard-rated items such as crisps, sweets and bottled water.

Hot takeaway drinks are always standard-rated, and freshly baked goods left to cool naturally can stay zero-rated if they meet none of the tests. Both zero-rated and standard-rated sales count towards your registration turnover, so the label changes the VAT you charge but not whether the sale is counted.

The registration deadline

The GOV.UK VAT registration page sets two rules. If you go over £90,000 across 12 months, you must 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 exceeded the threshold. GOV.UK's own example is a business that passes the threshold on 15 July: it must register by 30 August, with an effective date of 1 September.

If you expect to pass the threshold within the next 30 days alone, you must register by the end of that 30-day period, and the effective date is the day you realised it would happen. GOV.UK says that late registration means paying VAT on sales since the date you should have registered, and a penalty is possible.

Registering voluntarily below the threshold

GOV.UK says you can choose to register if your turnover is below £90,000, but you must then pay HMRC the VAT you owe from your registration date. ByteStart lists a benefit and a drawback. You can reclaim VAT on business purchases, and registration can make you look established to larger commercial customers. If most customers are members of the public who cannot reclaim VAT, your prices may become less competitive.

VAT Notice 700/1 says you can generally reclaim VAT on goods bought up to four years before registration, if you still hold them, and on services supplied up to six months before. You claim it on your first VAT return.

Once registered, mygov.scot notes that returns are usually due every three months and that all VAT-registered businesses are now enrolled in Making Tax Digital for VAT automatically. Factor that admin into your decision.

The Flat Rate Scheme

The GOV.UK Flat Rate Scheme page says you may be able to join if your VAT turnover is £150,000 or less, excluding VAT. You pay HMRC a fixed percentage of your VAT-inclusive turnover and keep the difference between that and the VAT you charged customers. You generally cannot reclaim VAT on purchases, except certain capital assets over £2,000.

The GOV.UK page on how much you pay explains the percentage. You get a 1% reduction in your first year as a VAT-registered business. A limited cost business, whose goods cost less than 2% of turnover or £1,000 a year if costs are above 2%, pays 16.5%. It also lists retail rates, including 4% for retailing food, confectionery, tobacco, newspapers or children's clothing and 7.5% for retailing not listed elsewhere. For catering services including restaurants and takeaways, the same page lists 12.5% from 1 April 2022, and it lists pubs at 6.5%. Whether a hot food stall counts as catering for this purpose is a question for HMRC or an accountant.

As an illustration, a caterer on 12.5% with £10,000 of VAT-inclusive sales pays HMRC £1,250, or £1,150 at 11.5% in the first year. The same sales taxed at the standard rate would leave 20% VAT of £1,666.67 before any VAT reclaimed on purchases, so the scheme can help a caterer who buys little that carries VAT. The comparison is arithmetic only, so have an accountant test it on your figures.

GOV.UK's own example uses a photographer on 11%, who bills £1,000 plus 20% VAT (£1,200) and pays £132. Applying the same method to a retailer on the 4% food rate, £10,000 of VAT-inclusive sales gives a flat rate payment of £400. Whether the scheme beats standard accounting depends on how much VAT you would otherwise reclaim, so ask an accountant to test it with your figures.

What registering does to your prices

For standard-rated goods, VAT is charged at 20%, the rate in GOV.UK's own Flat Rate Scheme example. A registered trader who keeps a shelf price of £12.00 hands one sixth of it, £2.00, to HMRC and keeps £10.00. To keep the full £12.00 after VAT, the price would need to rise to £14.40, which is £12.00 multiplied by 1.2. These round numbers are for illustration and apply only to standard-rated goods.

Customers who buy for personal use cannot reclaim the VAT, so a rise to £14.40 may cost sales. Customers who are VAT-registered businesses can usually reclaim it, which makes your prices less sensitive to the change. That is why the mix of consumer and trade customers matters when you weigh voluntary registration. Zero-rated products, such as many cold takeaway foods, charge no VAT to customers, so registration then mainly affects your ability to reclaim VAT on purchases.

VAT on pitch fees

Whether a pitch fee carries VAT depends on who charges it and how. HMRC's VAT Notice 742 on land and property lists granting traders a pitch in a market as an example of a licence to occupy land, and says such a licence is normally exempt from VAT. Exempt means the operator charges no VAT unless it has opted to tax.

HMRC's VAT Government and Public Bodies manual (last updated 11 August 2026) says the same for markets run by local authorities, and adds that the treatment turns on the facts of each case. It also says a local authority street trading licence is outside the scope of VAT. Some council schedules do show VAT, as our guide to pitch fees explained notes for Redditch.

For a trader the practical point is simple. You can only reclaim VAT that appears on a valid invoice, so a registered trader should check whether the pitch invoice shows VAT. If it shows none, there is nothing to reclaim. Costs of exhibition stands were not covered by a source read for this guide, so ask the organiser how VAT is treated.

Cancelling a VAT registration

GOV.UK lists £88,000 as the deregistration threshold, and cancelling is optional. THP says HMRC looks forward, so you generally need to show your taxable turnover over the next 12 months will be below £88,000. You apply online or with form VAT7.

THP adds that you must stop charging VAT once HMRC confirms the date, submit a final VAT return and account for VAT on stock and assets you still hold, though you normally do not need to if that VAT is £1,000 or less. Keep the cancellation notice with your records; THP says six years is normal.

Checklist and common mistakes

1. Add up your taxable sales for the last 12 months across every event, market and online channel, and repeat it at the end of each month.
2. Separate zero-rated, standard-rated and exempt sales.
3. Note which date you would pass £90,000 if sales continue, and diarise 30 days after that month ends.
4. Compare your pricing as a registered and non-registered trader before registering voluntarily.
5. Ask an accountant to test the Flat Rate Scheme against standard accounting.
6. Revisit your figures against the £88,000 deregistration threshold if sales fall.
7. Read our guide to pricing products for events before you change prices to include VAT.

Mistakes to avoid when you test your turnover:

• Treating turnover as profit. The test uses sales, not what is left after costs.
• Leaving out zero-rated sales, which count towards the threshold.
• Checking only the calendar year, when GOV.UK describes a rolling 12-month test.
• Forgetting the forward-looking test, which can trigger registration inside 30 days if you land one large contract or event.
• Waiting until after the 30-day window, which risks paying VAT on past sales out of your own pocket.
• Adding VAT to prices after registering without checking how customers will react.