VAT Registration for Contractors: Thresholds and Buyer Checks

VAT registration for contractors means signing up with HMRC so you charge VAT on your invoices and reclaim it on what you buy. It becomes compulsory once your VAT-taxable turnover goes over £90,000 in any rolling 12 months, or when you expect to pass that in the next 30 days alone. Under that, it's your choice. Simple. The bit contractors get wrong isn't the threshold. It's the date they check it.

Not tax advice. Your accountant signs this off, not a blog.

When does a contractor have to register for VAT?

HMRC gives you two tests. Fail either one and you're in. Figures below were checked on GOV.UK's register for VAT page on 14 October 2026.

The backward look: rolling 12 months

At the end of every month, add up your VAT-taxable turnover for the last 12 months. Not the tax year. Not your accounting year. The last 12 months, rolling.

If that goes over £90,000, you have 30 days from the end of that month to register. Your registration then takes effect from the first day of the second month after you went over. HMRC's own example: go over on 15 July, register by 30 August, VAT applies from 1 September.

The forward look: the next 30 days

This one catches growing firms. If you know your turnover in the next 30 days alone will go over £90,000, you register by the end of that 30-day period, and you're VAT registered from the day you realised it.

HMRC's example is a £100,000 contract signed on 1 May. Register by 30 May, effective 1 May. One refurb package can put you over in a single signature.

What happens if you're late

You owe VAT on your sales from the date you should have registered. Whether you charged it or not. And a penalty may apply on top.

Here's the part people hate hearing: if you didn't charge VAT on those invoices, it comes out of your margin.

My rule when I was running the maintenance company was boring and it worked. Check the rolling 12-month number every month, same day, before you send a quote for anything big. If a quote on your desk would push you over, you're having the VAT conversation before you sign, not after.

Do you actually need it? A quick decision table

Turnover means VAT-taxable turnover. Your accountant will tell you what counts in your case.

That operator row matters. An operator is the contractor business that manages the client, the delivery, the subbies and its own operatives. You hit £90,000 of billings way before you hit £90,000 of margin. "I only kept 20 grand" is the wrong number. HMRC looks at what you invoice.

Should you register voluntarily under £90,000?

Depends who pays you. That's the whole answer.

If your clients are VAT registered, like main contractors or commercial firms, VAT is mostly a pass-through for them. They reclaim it. You reclaim VAT on your materials, tools and the van.

If your clients are homeowners or small landlords who aren't VAT registered, registering voluntarily adds VAT to your price and they can't get it back. That's a straight price rise for nothing. Not worth it.

Voluntary registration comes with the same admin as compulsory: returns, Making Tax Digital records, the lot. Do it because the numbers work, not because it looks bigger.

What buyers check about your VAT status

This is the bit nobody tells subbies. Even when you don't legally need VAT, the people who give out work want to know your status.

We tracked 557 UK work sources, things like housing associations, councils, procurement portals and main-contractor supplier forms. As of July 2026, at least 58 of the 557 ask for VAT status, a VAT number or a VAT certificate outright. Around 33 more run on a standard supplier portal form that has the VAT question built in, which takes it to roughly 90.

The shape of it:

• Most put it in the account or registration form itself: a VAT yes/no box and a field for the number.
• A good chunk ask you to upload a VAT certificate alongside your company registration and insurance.
• A smaller group check it at the financial or payment stage, when they set you up to be paid.

What they're checking is simple. Is the number real, does it match the company name, and will VAT appear on your invoices so their finance team knows what's coming.

So if you're registered, have the certificate saved as a PDF and the number in your signature. If you're not, tick "no" with confidence. Not being VAT registered isn't a fail. Lying on the form is.

The domestic reverse charge, in one paragraph

If you're VAT registered and doing CIS work for another VAT-registered contractor, the domestic reverse charge probably applies. You don't add VAT to your invoice. Your customer accounts for it to HMRC instead. It doesn't apply when you invoice the end user, like a homeowner or a landlord having work done on their own building. It changes your invoices and your cash flow, so get it right from your first VAT invoice. HMRC's reverse charge guidance for building and construction services has the rules, and our full guide on CIS and the VAT reverse charge is coming next. Until then, if CIS itself is new to you, start with what CIS is and how it works.

How to register, step by step

1. Get your rolling 12-month turnover figure from your bookkeeping. Write it down with the date.
2. Decide which test you've hit, the backward look or the forward look. That sets your effective date.
3. Register online with HMRC through the GOV.UK service. HMRC doesn't charge a fee to register. Your accountant may charge for doing it, so ask them.
4. Wait for your VAT number and certificate. Don't put a VAT number on an invoice until you have one.
5. Update your invoice templates, including reverse charge wording where it applies.
6. Tell your clients and update every supplier portal you're on.
7. Set up Making Tax Digital compatible records and diarise your first return.

Where Plan@Job fits

Plan@Job is project and operations management for construction and property businesses. It won't file your VAT return and it doesn't replace your accountant.

What it does is keep your job numbers in one place. You split each job into internal stages with scope, dates, status and costs, whether a stage is done by subbies or your own operatives. So before you sign that big job, you can see what's live and what's coming. The client sees the agreed scope and price. Your internal stage costs and who your subbies are stay internal. More on that in project management.

On the money side, Maya Collins, our AI Finance Coordinator, prepares deposit requests and overdue payment chasers for you to approve. She works to fixed workflows and doesn't send money or set prices. You decide.

If you're running jobs through subbies and the paperwork is starting to bite, have a look at Plan@Job for contractors. If you want to talk it through with people building the same kind of business, that's what Contractor Club is for.

FAQ

Is the VAT threshold the same for every trade?

Yes. The £90,000 threshold is the same whether you're a plasterer, an electrician or a main contractor. What changes is how fast you hit it. Firms that subcontract most of their work hit it sooner because the threshold counts what you invoice, not what you keep.

Can I deregister if my turnover drops?

You can apply to cancel your registration if your turnover falls below the deregistration threshold, which GOV.UK sets slightly lower than the registration threshold. Check the current figure on GOV.UK before you apply. Think about your clients first, because some buyers expect a VAT number on file.

Do I need to be VAT registered to get on supplier lists?

Not always. Plenty of supplier forms just ask yes or no. But in our tracking, around 90 of the 557 UK work sources capture your VAT status somewhere, so have your answer and your paperwork ready either way.

The move is simple. Pull your rolling 12-month number today, write it down, and do it again on the same day next month.