VAT threshold for trades: rolling 12‑month calculator and simple workflow to avoid fines

Category: Finance & Tax Niche: VAT, threshold, rolling 12 months, Google Sheets, HMRC

Contents

• Who this is for
• What the VAT threshold is (in plain English)
• Rolling 12‑month calculation: how to track it without an accountant
• Build a simple VAT threshold tracker in Google Sheets
• Automate alerts so you don’t miss it
• What to do if you’re going to cross it in the next 30 days
• Common mistakes UK trades make
• Useful links
• FAQs

Who this is for

Small contractors and sole traders in the UK who are close to the VAT line and need a simple, reliable way to stay compliant without hiring a bookkeeper. Works for plumbers, sparkies, roofers, joiners and anyone issuing invoices.

What the VAT threshold is (in plain English)

• The VAT registration threshold is £90,000 of taxable turnover in any rolling 12‑month period.
• The deregistration threshold is £88,000.
• Both thresholds apply per HMRC rules for 2025/26. See GOV.UK guidance in VAT Notice 700/1 supplement and the policy note on increasing the registration threshold.

Two key triggers:

• If your last 12 months’ taxable turnover goes over £90k, you must register.
• If you expect to go over £90k in the next 30 days alone (big contract), you must register.

Taxable turnover includes standard, reduced and zero‑rated sales, but not exempt or out‑of‑scope income. Builders under the Domestic Reverse Charge still count the sale value for threshold purposes even if VAT isn’t charged on that invoice.

Rolling 12‑month calculation: how to track it without an accountant

You’re looking at the last 12 months at any point, not a calendar or tax year. So March to February, then April to March, and so on. The easiest way is to keep monthly totals and sum the latest 12 months.

What to include in turnover

• Labour and materials you invoice to customers (ex VAT amounts)
• Zero‑rated work (e.g., some new build elements) still counts
• Reverse‑charge sales count by value

Exclude: grants, outside‑scope items, sales of capital assets not part of your usual business.

Build a simple VAT threshold tracker in Google Sheets

Set up a single sheet and enter your monthly taxable turnover. The sheet will calculate the last 12 months and flag when you cross £90k.

Columns:

• A: Period end date (e.g., 31/01/2025)
• B: Taxable turnover (ex VAT) for that month
• C: Rolling 12‑month total
• D: Threshold (from a single setting cell)
• E: Exceeded? (flag)

One‑time setup:

• Put 90000 in cell F1. Label it “Threshold”.

Formulas (enter in row 2 and fill down):

• C2: =IF(ROW()<13,"",SUM(INDEX($B:$B,ROW()-11):B2))
• D2: =$F$1
• E2: =IF(AND(C2<>"",C2>=$F$1),"Exceeded","")

Optional “first month exceeded” so you don’t miss it:

• G1: First month exceeded
• G2: =IFERROR(INDEX($A:$A, MATCH(TRUE, $C:$C>=$F$1, 0)), "")

Tips:

• Only enter taxable turnover (ex VAT). Don’t mix in gross amounts.
• Add conditional formatting to turn column C red when C >= £90,000.
• Prefer monthly? Fine. Want weekly? Use the same logic but sum the latest 52 rows instead of 12.

Automate alerts so you don’t miss it

• Google Sheets email alert: Use an Apps Script to email you when column E changes to “Exceeded”.
• Calendar reminder: Create a monthly recurring reminder titled “Update VAT turnover” for the last day of the month.
• WhatsApp nudge: If you use Make or Zapier, send yourself a WhatsApp message when the sheet crosses £85k (early warning), then again at £90k.

What to do if you’re going to cross it in the next 30 days

• You must register within 30 days of knowing. Start here: Register for VAT.
• Your registration date will be the date you realised you’d go over, not when you actually cross it.
• From that date you must charge VAT on taxable sales and can reclaim input VAT (subject to scheme rules).

If you temporarily go over then drop back down: HMRC may let you apply for an exception if the breach is accidental and exceptional. See HMRC guidance on exceptions in VAT Notice 700/1.

Common mistakes UK trades make

• Watching tax year totals instead of rolling 12 months.
• Forgetting zero‑rated work still counts toward the £90k.
• Not counting reverse‑charge invoice values toward the threshold.
• Tracking gross instead of ex‑VAT amounts in your sheet.
• Waiting until bookkeeping is done by an accountant weeks later.

Useful links

• HMRC policy note: Increasing the VAT registration threshold.
• HMRC guidance: VAT Notice 700/1: supplement.
• Domestic Reverse Charge for building and construction: HMRC guide.
• Rolling 12‑month sheets tutorial in our Academy: See also our article on Automate CIS returns from job sheets for similar sheet logic.

FAQs

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