VAT Taxable Turnover

Key facts

VAT taxable turnover includes all standard-rated, reduced-rate, and zero-rated sales.
Exempt supplies and outside-the-scope income do not count.
HMRC uses a rolling 12-month test and a forward-look test.
The current registration threshold is £90,000 (from April 2024).

How to Calculate Your VAT Taxable Turnover

VAT taxable turnover is the total value of everything you sell that is not exempt from VAT. It includes supplies that are standard-rated (20%), reduced-rate (5%), and zero-rated (0%).^[1]

What Counts Towards Taxable Turnover

Sales of goods and services at 20% (standard rate)
Sales at 5% (reduced rate)
Sales at 0% (zero rate) — these are still “taxable” even though the rate is nil
Goods you take from the business for personal use
Goods sold to staff at below cost
Bartered or part-exchanged goods and services

What Does Not Count

Exempt supplies — insurance, financial services, education, health services
Outside-the-scope items — wages, dividends, statutory fees, grants
Sales of capital assets (in most cases)
Income from a hobby that isn’t a business^[2]

The Two Threshold Tests

HMRC applies two tests to decide whether you must register:^[1]

Test	How It Works	When to Register
Historic test	At the end of any month, look back at the last 12 months’ taxable turnover	If it exceeds £90,000 — register within 30 days
Future test	At any point, do you expect taxable turnover to exceed £90,000 in the next 30 days alone?	If yes — register immediately

Tip: If you have a single large contract or invoice that pushes you over £90,000, you may need to register even if your regular turnover is well below the threshold.

How to Calculate Your Taxable Turnover

Add up the gross value of all taxable supplies (before any VAT) made in the last 12 months. Do this calculation at the end of every month.^[3]

If you’re close to the threshold, keep careful records and check monthly.

What If You Exceed the Threshold?

If your taxable turnover exceeds £90,000, you must:

Register within 30 days of the end of the month you exceeded the threshold
Your registration takes effect from the first day of the second month after exceeding
Start charging VAT from your effective date of registration

Frequently Asked Questions

What counts towards VAT taxable turnover?

VAT taxable turnover includes all standard-rated (20%), reduced-rate (5%), and zero-rated (0%) sales. It also includes goods taken for personal use and bartered or part-exchanged items.

Do zero-rated sales count towards the VAT threshold?

Yes. Zero-rated supplies are still “taxable” for VAT purposes and count towards your VAT taxable turnover, even though the VAT rate is 0%.

Do exempt supplies count towards the VAT registration threshold?

No. Exempt supplies and outside-the-scope income do not count towards your VAT taxable turnover and are excluded from the registration threshold calculation.

How do I calculate my VAT taxable turnover?

Add up the gross value of all taxable supplies (before any VAT) made in the last 12 months. Perform this calculation at the end of every month using a rolling 12-month window.

Sources

VAT registration thresholds — GOV.UK
VAT guide (VAT Notice 700) — GOV.UK
Work out your VAT taxable turnover — GOV.UK