Understanding Great Britain VAT Registration Triggers and Thresholds

How Great Britain VAT Registration Triggers Work

Great Britain asks one question before anything else: is your business established in the UK? The answer decides which threshold you are measured against, and the two thresholds are very far apart. Kintsugi tracks your position against the right one and tells you when you cross it.

• If your business is established in the UK, the threshold is £90,000 of taxable turnover in a rolling 12-month period

• If your business is not established in the UK, the threshold is £0, and your first taxable supply can create the obligation

• A UK establishment therefore raises your threshold rather than lowering it, which is the opposite of how US state nexus works

• Two tests apply to the £90,000 threshold: a backward look over the last 12 months, and a forward look over the next 30 days

• Zero-rated sales count toward the threshold. Exempt sales do not

• A non-established business whose Great Britain sales are all business-to-business, all through marketplaces, all zero-rated, or all exempt has no registration duty

• Kintsugi monitors economic, physical, and collected-tax exposure, and applies UK economic nexus rules from 1 January 2018

The Thresholds

The £90,000 figure took effect on 1 April 2024. It was £85,000 from 1 April 2017. Both the registration and deregistration thresholds have been held at their current levels since 2024, so older guidance quoting £85,000 is out of date.

What "Established In The UK" Means

This is the pivot the whole article turns on, so it is worth being concrete. You are established in the UK if you have a business establishment or a fixed establishment there.

A business establishment is where your business is actually run, meaning the head office or the place where day-to-day management decisions are taken. A registered office address on its own is not enough.

A fixed establishment is somewhere other than your head office that has the human and technical resources needed to make or receive supplies on a permanent basis. A UK branch with staff and offices is a fixed establishment. So is an arrangement where a UK subsidiary or agent acts in your name to provide your services.

These do not create a UK establishment:

• An address at your accountant's office, with no other UK offices or staff

• Staff and equipment sent to the UK temporarily, for example a film crew on a one-week shoot

• Contractors in the UK for a single one-off project

• Computer servers in the UK with no supporting people

• A UK VAT registration on its own, with no supporting resources in the UK

How Physical Presence Is Treated

Kintsugi tracks physical presence in Great Britain and reports it so you can see it. Unlike most US states, a physical presence in the UK does not force you to register on day one. Where the presence creates a UK establishment, the £90,000 threshold applies to it.

None of these presences is treated as exposed by default in Kintsugi. Where the row says no, the presence does not create a registration duty by itself, and your position is then driven by your taxable supplies under the test that applies to you.

The Two Tests For The £90,000 Threshold

The backward look, over 12 rolling months

At the end of every month, add up your taxable turnover for the previous 12 months. If it is over £90,000, you have crossed.

• Notify HMRC within 30 days of the end of the month in which you went over

• Your registration normally takes effect from the first day of the second month after you crossed

For example, if your taxable turnover for the 12 months to 31 August 2026 comes to £91,200, notify HMRC by 30 September 2026 and your registration normally takes effect on 1 October 2026. You are liable for VAT from that date even if your VAT number arrives later.

The forward look, over the next 30 days

If you have reasonable grounds to expect your taxable turnover to exceed £90,000 in the next 30 days on its own, you must register. Signing a large contract is the usual trigger.

• Notify HMRC immediately, and by the end of that 30-day period at the latest

• Your registration takes effect from the start of that 30-day period, not from the end of the month

This test can leave you liable for VAT on sales made before your VAT number arrives, so if you are negotiating a contract of that size, raise it with us before you sign.

What Counts Toward The Threshold

Counts:

• Standard-rated and reduced-rated sales

• Zero-rated sales, including exports of goods dispatched from the UK

• Sales to businesses and sales to consumers

• Sales made through a marketplace or platform

• Sales of goods and sales of services

Does not count:

• Exempt supplies, such as insurance and certain finance, health, and education services

• Supplies made outside the scope of UK VAT

• Refunded sales, which come off at the date of the credit note

• Capital assets you sell out of your own business

Exports catch people out. If your goods are dispatched from the UK and physically leave the UK, the sale is normally zero-rated, and it still counts toward your £90,000. Kintsugi reviews your worldwide transactions for a UK-established business and includes any sale where the dispatch origin is the UK, whatever the destination.

When A Non-Established Business Does Not Have To Register

The £0 threshold sounds absolute, and it is not. If you are not established in the UK and your Great Britain sales fall entirely into one of these patterns, you have no duty to register:

• Every sale is to a VAT-registered UK business, confirmed by a valid VAT number

• Every sale is made through a marketplace or platform that accounts for the VAT

• Every sale is zero-rated

• Every sale is exempt

The word doing the work there is every. As soon as you make a taxable supply outside those patterns, for example a single sale to a UK consumer, you become liable and you are required to register. Kintsugi applies these carve-outs when it calculates your exposure, which is why an organization selling only to UK businesses will not be shown as exposed.

Confirming your customers' VAT numbers is what makes the business-to-business carve-out hold. A customer you have recorded as a business without a valid VAT number may be treated as a consumer.

Collected-Tax Exposure

If you have already collected UK VAT without meeting either threshold, Kintsugi flags collected-tax exposure. You have two ways to resolve it:

• Refund the amount you collected in error to your customers

• Register with an effective date on or before the date you started collecting, and remit what you collected

The second route means your registration date is earlier than the date your nexus was met. Raise it with us so the registration is submitted with the right effective date.

Registering Voluntarily

You can register below the £90,000 threshold. Businesses usually do it for one of two reasons:

• Registering is the only way to recover UK input VAT on your costs

• Some corporate customers expect their suppliers to be VAT-registered

If most of your customers are VAT-registered businesses who can recover the VAT you charge, the downside is small. If you sell mainly to consumers, adding 20% to your prices is a real commercial decision, so weigh it before you submit.

What Kintsugi Monitors

Kintsugi tracks three kinds of exposure in Great Britain:

• Economic exposure, meaning your taxable turnover against the threshold that applies to you, with UK economic nexus rules applied from 1 January 2018

• Physical exposure, meaning a branch, office, staff, warehouse, or other presence in the UK

• Collected-tax exposure, meaning UK VAT you have already collected without meeting either of the above

What This Does Not Cover

• Northern Ireland goods rules. The EU-aligned treatment for goods, including the distance-selling threshold for EU businesses selling goods to Northern Ireland consumers, is not yet in scope. UK rules for services apply to Northern Ireland in full.

• Goods sold into Great Britain. These are handled at the border or under the £135 consignment rules, and they are not part of Kintsugi's calculation. If you sell goods, your real threshold position may differ from what Kintsugi shows.

• VAT group eligibility. Whether your companies meet HMRC's control and establishment tests for a VAT group is a question to raise with us before you register.

• Penalties for late registration. Kintsugi does not calculate them. HMRC charges a penalty based on the VAT owed from the date you should have registered.

• Deregistration. Kintsugi does not currently automate UK deregistration. Contact us if your turnover has fallen below £88,000 and you want to deregister.

• Back filings for periods before your registration date. Raise these with us so they can be assessed separately.

• How to submit the registration. See Request a Great Britain VAT Registration in Kintsugi.

This article is general information about how Kintsugi works, not tax advice for your specific situation.

FAQs

Q: My business is in the US with no UK office. Is my threshold really £0?

A: Yes, if you make taxable supplies in Great Britain. The £90,000 threshold is for businesses established in the UK. Check the carve-outs first, because a business selling only to VAT-registered UK businesses has no duty to register.

Q: I opened a small UK office. Does that mean I have to register immediately?

A: It means the opposite. A UK establishment moves you from the £0 threshold to the £90,000 threshold, so you have more headroom, not less.

Q: I have a remote developer in Manchester. Does that create an obligation?

A: Not on its own. A remote employee with no authority to make sales is not treated as creating a registration obligation. Kintsugi flags the presence so you can see it, and your position is then driven by your taxable supplies.

Q: Do my zero-rated exports count toward the £90,000?

A: Yes. Goods dispatched from the UK that leave the UK are normally zero-rated, and they still count toward the threshold. Exempt sales are the ones that do not count.

Q: I crossed £90,000 in August. When do I start charging VAT?

A: Notify HMRC by 30 September, and start charging from the effective date on your registration certificate, normally 1 October. Do not add VAT to invoices before that date.

Q: Does storing inventory in a UK fulfilment centre trigger registration?

A: Storage creates a UK establishment, which puts you on the £90,000 threshold rather than the £0 one. It does not force you to register on day one.

Q: What happens if I go over the threshold only once, because of a one-off sale?

A: HMRC can grant an exception if you can show your turnover will stay below the deregistration threshold of £88,000 over the following 12 months. You have to apply for it rather than assume it, so raise it with us.

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