Is the £90,000 threshold based on rolling 12 months or the tax year?

The direct answer

The UK VAT registration threshold of £90,000 is measured against a rolling 12-month window. The window updates at the end of every calendar month, and it always covers the previous 12 calendar months from that point.

It is not measured against:

• The UK tax year (6 April to 5 April)
• Your company's accounting year
• The calendar year (1 January to 31 December)
• Any other fixed annual period

Those other windows may matter for income tax, corporation tax, or your own financial reporting, but they don't matter for the VAT threshold test.

How the rolling test actually works

At the end of every calendar month, you do one calculation: add up your taxable turnover for the 12 months ending on that date. If the total exceeds £90,000, you've triggered compulsory registration on the historical test.

You then have 30 days from the end of that month to notify HMRC, with an effective registration date of the first day of the second month after the threshold was crossed. (More on that timing mechanic in our article on when you need to register.)

The crucial property of the rolling window: it moves forward by one month, every month. The 12 months you look at in April are not the same 12 months you look at in May. April's window drops the oldest month from a year ago and adds the most recent month. May's window does the same, one step further forward.

Why this confusion is so widespread

Almost every other UK tax figure works on a fixed annual basis. The personal allowance, the basic rate band, the higher rate threshold, the dividend allowance, the capital gains exemption, the corporation tax bands, all of these reset on a date and apply to a defined fixed period.

The VAT registration threshold is the conspicuous exception. There's no equivalent annual reset, no fixed window, and no "tax year for VAT" that the threshold maps to. The mental model that works for every other UK tax produces the wrong answer here.

The other factor: many bookkeeping systems and accountant communications are organised around the accounting year. Year-end figures get the most attention. Monthly reporting often shows month-on-month or year-to-date numbers. The 12-month rolling figure isn't a standard output of most accounting software, so it has to be specifically pulled together.

The "dropping month" trap

Each new month-end, two things happen simultaneously to the rolling figure:

• The most recent month's turnover is added to the front
• The 13th-most-recent month's turnover drops off the back

For a business with even monthly turnover, the rolling total stays relatively stable. For businesses with seasonal income, project-based work, or any uneven trading pattern, the figure can move dramatically from one month-end to the next without anything actually changing in your current trading.

This effect is most pronounced for:

• Seasonal businesses (tourism, retail with strong Q4 peaks, summer-only operations)
• Project-based businesses with lumpy invoice patterns (consultancies, construction, agencies)
• Businesses growing fast, where each new month is materially larger than the month that just dropped off
• Businesses that had a one-off large month in the past, where the eventual exit of that month from the window can produce a meaningful drop

Where this gets ambiguous in practice: the rolling test is mathematically simple but operationally easy to misread. A business that crossed the threshold three months ago, dropped a large month off the back, and is now below £90,000 on the rolling figure may still have triggered compulsory registration when the threshold was first crossed. Falling back below doesn't reverse the trigger.

What's measured: the calculation in detail

The figure you put into the rolling calculation is your taxable turnover, not your total revenue. Taxable turnover includes:

• Standard-rated sales (20%)
• Reduced-rated sales (5%)
• Zero-rated sales (0%, including most food, books, children's clothing, exports)

It excludes:

• VAT-exempt sales (most insurance, healthcare, education, financial services, residential rentals)
• Out-of-scope income (pure donations, grants without deliverables, employment income, certain disbursements)
• One-off sales of capital assets used in your business

The distinction between taxable, exempt, and out-of-scope is itself a frequent source of error, especially for mixed-activity businesses. We cover the detail in our article on what counts as taxable turnover.

What you should actually do, monthly

The practical monitoring routine is straightforward, even if most businesses don't follow it consistently:

1. At the end of every calendar month (not your accounting month-end if it's different), pull together your taxable turnover for the previous 12 months
2. Compare against £90,000
3. If the result is approaching £90,000 (typically within 10%, so above £81,000), flag for closer attention
4. If the result crosses £90,000, notify HMRC within 30 days of that month-end
5. Separately, look forward 30 days: if a signed contract, expected order, or other reasonable expectation suggests you'll exceed £90,000 in that 30-day period alone, registration is required immediately under the forward-look test

Most accounting software won't surface the rolling 12-month taxable turnover figure by default. It typically needs to be set up specifically, either through a custom report, a spreadsheet that pulls from the books, or a regular check by your accountant.

What if you discover you've already crossed it?

If you run the rolling calculation and discover you crossed £90,000 some months ago without notifying HMRC, you're now in a late-registration situation. The path forward depends on how late, whether HMRC has contacted you, and the specifics of your taxable turnover composition.

The general rule: unprompted disclosures to HMRC carry significantly lower penalties than situations where HMRC discovers the late registration themselves. But the exact figures, the backdated VAT calculation, the customer reimbursement question, and the penalty mitigation arguments all depend on the specifics. This is the kind of situation where a specialist conversation before contacting HMRC tends to pay for itself many times over.

The situations that most often turn into costly mistakes

The rolling vs tax year confusion is the single most common cause of late VAT registration in the UK. The situations below are where the cost most often materialises, sometimes years later when HMRC reviews bank data or marketplace reports:

• You've been tracking your turnover by accounting year and want to know whether you may have crossed the threshold on the rolling basis without noticing
• You run a seasonal or project-based business and want to understand how the dropping-month effect applies to your specific revenue pattern
• You've just looked at the rolling figure and discovered you may already have crossed £90,000, and want to handle the disclosure to HMRC properly
• You think you crossed the threshold briefly and have since fallen back below, and want to know whether that affects the registration obligation
• You're growing fast and want to set up a proper monitoring routine before the threshold becomes a real issue
• HMRC has contacted you about late registration based on data they've gathered from banks, marketplaces, or tax filings

Whether you're a business owner or an accountant working on a client case, we focus on the VAT questions where extra expertise pays off, and we work in plain English.