The VAT Rolling 12-Month Test: How to Check If You Must Register
More small businesses get caught out by the VAT rolling 12-month test than by almost any other registration rule, because it does not reset each January or align with your accounting year. It is a rolling window that you must recheck every single month.
What 'rolling 12 months' actually means
At the end of any given month, you look back over the 12 months that just ended and add up your taxable turnover. This is not your turnover for the current tax year or accounting year — it is always the most recent complete 12-month block, recalculated every month.
A worked example
Say a business had these monthly taxable sales: steady months of roughly £6,000 through most of the year, but two exceptional months of £15,000 each due to a large project. If the total of the trailing 12 months at the end of any month exceeds £90,000, registration is triggered — even if the business's turnover was well under that figure in most individual months and even if the current calendar year total looks fine.
What counts as taxable turnover
- Standard-rated sales (20%).
- Reduced-rated sales (5%).
- Zero-rated sales (0%) — these count towards the threshold even though no VAT is charged.
- Exempt sales do not count towards the threshold.
The 30-day forward-looking test
Separately from the rolling 12-month check, you must also register if you expect your taxable turnover to exceed £90,000 in the next 30 days alone — for example after signing one large contract. In that case, registration is required immediately, and you do not wait for month end to check.
What happens if you miss the point you crossed it
You must notify HMRC within 30 days of the end of the month in which you exceeded the threshold. Registration then takes effect from the first day of the second month after you crossed it. If you register late, HMRC can backdate your registration and may charge the VAT you should have collected from customers in the meantime, plus penalties — even if you never actually charged it.
Practical next steps
- At the end of every month, total your taxable turnover for the preceding 12 months.
- Include zero-rated sales in the total — only exempt sales are left out.
- Set a calendar reminder to repeat this check monthly, not annually.
- If a single large contract alone would exceed £90,000 in the next 30 days, register immediately rather than waiting for month end.
