The VAT threshold for online sellers
You must register for VAT when your taxable turnover goes over £90,000. Online sellers often get the timing or the totals wrong, and it's an expensive mistake. Here's how the test works.
Checked against GOV.UK on 12 October 2026 · About a 6-minute read
1. What "taxable turnover" means
It's the value of everything you sell that isn't exempt from VAT. That covers sales at the standard rate (20%), the reduced rate (5%) and the zero rate (0%), after refunds but before fees, plus the value of certain services you buy from abroad (see section 4). Exempt sales, and anything outside the scope of UK VAT, don't count.
2. It's a rolling 12 months, not the tax year
At the end of every month, add up your taxable turnover for the last 12 months. If it's over £90,000, you have 30 days to register.
You also have to register straight away if you expect to go over £90,000 in the next 30 days alone, for example after a very large order.
Source: GOV.UK: Register for VAT
3. It's turnover, not profit
The threshold uses your sales, not what's left after costs. A seller turning over £95,000 on a 20% margin is over the line, even though they only made £19,000.
For online sellers that means:
- Use total sales after refunds, before fees. Platform and payment fees don't come off. The annual platform report is after fees, so add them back.
- Add up every channel. Shopify, Amazon, Etsy, eBay and in-person sales all count together.
- Zero-rated sales count. Children's clothes and books are taxed at 0%, but they still count towards the £90,000.
- Exports usually count too. Goods sent abroad are normally zero-rated, so they're included. Some services sold to overseas business customers may not be. It depends on what you sell and to whom.
Source: GOV.UK: VAT Notice 700/1: should I be registered for VAT?
4. Fees billed from abroad can count too
Many sellers pay Shopify, Meta and Google from overseas. Under VAT's "reverse charge" rules, the value of those services can count towards your taxable turnover, which can push a seller near the threshold over it. The VAT check includes them for that reason.
How this applies depends on your situation, so ask an accountant to confirm it for you.
5. Getting it wrong costs money
If you register late, HMRC can backdate your registration. You then owe VAT on sales you made without charging it, out of your own pocket. For standard-rated goods that's about a sixth of those sales, because HMRC treats the prices you charged as already including VAT.
Penalties and interest can come on top.
6. Below the line
- Under £90,000: you can register voluntarily, but you don't have to.
- Already registered: you can ask to cancel if you expect your taxable turnover in the next 12 months to be £88,000 or less.
7. Close to £90,000?
Check your real figures every month, and talk to an accountant before you cross the line. Your prices may need to change.
This guide explains published HMRC rules as they stood on 12 October 2026. It isn't personal tax advice. If your situation is unusual, speak to an accountant. Last checked: 12 October 2026.